Inflation Watch at Fed, ECB, RBA and BOJ – Bond Market Review

U.S. Treasuries closed the week with solid gains in longer tenors that helped 10s and 30s turn positive for the week while the 2-yr note underperformed, ending little changed. A stalemate perhaps ahead of key measures of inflation for the Federal Reserve, ECB, RBA and Bank of Japan to mull over. The outperformance in the long bond pressured its yield to a ten-day low while the 10-yr yield finished near the bottom of this week’s 11 basis point range. The … Continue reading “Inflation Watch at Fed, ECB, RBA and BOJ – Bond Market Review”

CPI and PPI Reversal of Deflationary Process – Bond Market Review

U.S. Treasuries closed the week on a lower note, in a somewhat feral week ten-year Treasury yields rose 10 basis points to 4.28%, but it could have been so much worse. Yields closing back toward highs reached Tuesday after January’s CPI data confirmed inflation is not in dead in the water. Headline inflation rose 0.3% for the month versus the 0.2% expected. Year-over-year headline inflation was at 3.1% compared to expectations of 2.9%. Core (ex-food and energy) CPI rose stronger … Continue reading “CPI and PPI Reversal of Deflationary Process – Bond Market Review”

Abundant Marketplace Liquidity and Easy Credit Availability – Bond Market Review

Friday saw a repeat for U.S. Treasuries closing out the week on a sharply lower note, yields on the 10-yr note and shorter tenors went their highest closing levels since mid-December while the long bond outperformed, keeping its yield three basis points below its highest close from last month. We saw the same last Friday with yields coming off their lowest levels of the year after the red-hot January jobs report showed headline growth of 353,000, twice as high consensus. … Continue reading “Abundant Marketplace Liquidity and Easy Credit Availability – Bond Market Review”

Rates React to Fed and Strong Jobs – Bond Market Review

U.S. Treasuries closed out the week on a sharply lower note, yields coming their lowest levels of the year after the red-hot January jobs report showed headline growth of 353,000, twice as high consensus. The report fed the rationale that the Fed will maintain its hawkish rhetoric. Notably Chicago Fed President Goolsbee said that the report will not influence policy in the near term, noting that the drop in the average workweek to 34.1 hours from 34.3 hours reflected weakness … Continue reading “Rates React to Fed and Strong Jobs – Bond Market Review”

Bond Traders Weekly Outlook: Treasury Refunding, FOMC Headwinds

U.S. Treasuries closed out the week lower in response to stronger than expected personal spending (actual 0.7%; consensus 0.4%) in December and Pending Home Sales for December (actual 8.3%; consensus 2.3%) giving rise to Fed officials hawkish rhetoric ahead. The selling drove the 10-yr yield back above its 50-day moving average (4.129%) while yields on 2s and 5s reversed the bulk of their declines from Thursday. This week’s action alleviated some of the pressure on the 2s10s spread, expanding it … Continue reading “Bond Traders Weekly Outlook: Treasury Refunding, FOMC Headwinds”

Bond Traders Weekly Outlook: What Would a 2024 Global Yield Spike Do?

The bond market has thrown out a challenge to traders and Fed officials and ask themselves was last quarters rip your heads squeeze rally a head fake in an ongoing global bond bear market? Do they downplay the odds of a surprising stronger U.S. economy than forecast? Labor markets remain tight, while many politically motivated pundits call victory on what is in reality already elevated inflation above the 2% goal. We saw UK and Canada both report stronger-than-expected inflation. it … Continue reading “Bond Traders Weekly Outlook: What Would a 2024 Global Yield Spike Do?”

Using Bid to Cover Ratios to Gauge Bond Auction Strength

Interest rate and therefore bond price volatility has picked up in the past eighteen months as Central Banks have tried to rein in inflation, easy money and regain a semblance of control. With this swift move in rates since October we watch to see if the market chases lower yields with stronger bid-to-cover ratios. The bid-to-cover ratio is a simple way to measure auction strength as it balances demand and supply. In the US with debt seemingly increasing by the … Continue reading “Using Bid to Cover Ratios to Gauge Bond Auction Strength”

Bond Traders Weekly Outlook: Treasuries 2s10s Spread Eases with Input Prices

U.S. Treasuries rallied this week with ten-year yields reversing 11 of the previous week’s 17 bps jump, while MBS yields reversed all of the 24-bps surge. Two-year Treasury yields sank 24 basis points this week, with yields 11 bps lower over two weeks. This week’s action alleviated some more pressure on the 2s10s spread, expanding it by 15 bps to -20 bps. Market expectations for the policy rate at the December FOMC dropped a notable 30 bps this week to … Continue reading “Bond Traders Weekly Outlook: Treasuries 2s10s Spread Eases with Input Prices”

Global Bond Market Performance in 2023

The year 2023 will go down as one of the most traumatic and destructive bond markets on record, for the extreme moves, the money lost, the bank collapses as a result and the glaring statement it made. The statement that many Banks, Treasuries, Politicians and Central Banks have no idea what they are doing with regards to risk and money management and influence. We came from 2022, a year of slowly rising rates at year end with ZIRP in effect … Continue reading “Global Bond Market Performance in 2023”

Catalysts that Empowered 2023’s Treasury Bond Sell Off and Rates to Soar

Interest rates began rising before the end of 2022, then after the first Federal Reserve meeting of 2023 bonds began to fall more sharply, meaning rates rose more steeply. This led to a number of crises that became self-fulfilling such as the Regional Bank crisis. The Federal Reserves’ reaction eased liquidity as the banks were bailed out. This established the next legs of catalyst in the bond rout and with-it soaring interest rates globally. On July 27th the Bank of … Continue reading “Catalysts that Empowered 2023’s Treasury Bond Sell Off and Rates to Soar”