The Treasuries market took another leg higher on Wednesday, as a slowdown in private-sector job creation further encouraged traders to bet on US interest-rate cuts ahead of broad labor-market data due Friday.
The Treasury market’s nascent rally is facing its next big test: a bond auction that will help gauge whether investors are confident 2023’s selloff is over once and for all.
On Monday, the 10-year Treasury yield climbed over 5%, a 16-year high. It’s a level few would have predicted during the long run of rock-bottom interest rates that followed the Great Financial Crisis.
Bond investors’ concern over a potential US recession deepened after Federal Reserve Chair Jerome Powell signaled policymakers may keep pushing interest rates higher.
The market for wagers on the course of Federal Reserve policy shows that traders now expect the US central bank’s policy rate will peak in September, where they previously looked for it to crest in July.
Wall Street bond dealers are moving rapidly to the sidelines of US Treasury auctions — the very activity that defines their status at the heart of the world’s biggest bond market.
Three months after the Federal Reserve stopped reinvesting all of the maturing Treasury securities in its portfolio -- allowing $30 billion a month to run off -- its holdings of the debt ought to be lower by $90 billion.
One of the US bond market’s most widely watched indicators of potential recession risk has reached levels last seen in 2007.
Bond traders are boosting expectations for U.S. inflation to levels not seen in over a decade amid concern supply-chain bottlenecks and resurgent consumer demand will keep lifting the cost of goods and services.
Long-term Treasury rates tumbled to the lowest levels in months on Monday as the spread of the delta coronavirus variant called into question optimistic assumptions about economic recovery, also touching off a global stock market slump.
Thomas Costerg doesn’t usually go to bed with a computer, but he couldn’t help himself Thursday night after what had just happened in the Treasury market.
The conventional wisdom that inflation will be rekindled in the U.S. -- ending the massive Treasuries rally and driving up yields -- is bunk, according to a Texas fund manager whose three-decade bullish stance on bonds propelled another banner year in 2020.
For the first time in two years, bond investors are betting that U.S. inflation will average close to 2% per year over the coming decade.
