>(Bloomberg) — The 30-year Treasury bond’s yield rose to nearly 5% for the first time since July, underscoring investor concerns about US fiscal trends and elevated inflation.
>The US 30-year yield climbed as much as four basis points to 4.999% on Wednesday before stabilizing, mirroring similar moves in the UK and Japan, where a deepening selloff pushed borrowing costs to the highest this century.
It’s been more or less bouncing around this range for the last 6 months.
AnUnmetPlayer on
>*“The signal is quite clear that there is still at these levels no appetite for the long end,” Ella Hoxha, head of fixed income at Newton Investment Management, told Bloomberg TV this week. “The risks are there’s going to be less appetite going forward.”*
>*In the US, the moves underscore the pressure on the government from investors who want more compensation as they’re called on to finance spending plans and tax cuts by the Trump administration.*
The 30 year yield has dropped almost 100 basis points since they published this. It’s currently at 4.911%. The 1 year is currently at 3.774%, which is going on the lowest level in three years. So is that a clear signal, Ella? Does that mean investors suddenly got a lot happier with the Trump administration and will reward them with lower borrowing costs? No, that won’t get written? How weird.
The yield curve is steepening because of deeper uncertainty over the future trajectory of the policy rate. That’s basically it. All the narratives about confidence and investors demanding more from a chaotic government are just made up by the media.
The narratives don’t mean anything, and will inevitably backfire when rates get cut because when yields fall the implication will be that the market likes fascist idiots trying to consolidate all power.
wow343 on
If you zoom to max you can see that it was about this level during the late 90s before the bubble. The issue is that since then we have a much higher debt to GDP ratio and much larger government debt every fiscal year. A similar level to the late 90s or God forbid the Volker 80s will cause the entire system to be shaken. However the current fiscal policy in the US doesn’t seem to be changing. It seems only a fiscal crisis where the fed loses control of long term rates as happened in the late 70s is coming. This can only be solved via very high interest rates and or punishing federal cuts. The only difference between now and then is the rise of the Asian export led economies that seem to absorb or slow down inflation. However if this changes with more consumption in Asia or less production in China and Asia then we will see the same type of situation as in the 70s.
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>(Bloomberg) — The 30-year Treasury bond’s yield rose to nearly 5% for the first time since July, underscoring investor concerns about US fiscal trends and elevated inflation.
>The US 30-year yield climbed as much as four basis points to 4.999% on Wednesday before stabilizing, mirroring similar moves in the UK and Japan, where a deepening selloff pushed borrowing costs to the highest this century.
Just to put this in context, here’s the UST 30 year constant maturity over time: https://fred.stlouisfed.org/series/DGS30
It’s been more or less bouncing around this range for the last 6 months.
>*“The signal is quite clear that there is still at these levels no appetite for the long end,” Ella Hoxha, head of fixed income at Newton Investment Management, told Bloomberg TV this week. “The risks are there’s going to be less appetite going forward.”*
>*In the US, the moves underscore the pressure on the government from investors who want more compensation as they’re called on to finance spending plans and tax cuts by the Trump administration.*
The 30 year yield has dropped almost 100 basis points since they published this. It’s currently at 4.911%. The 1 year is currently at 3.774%, which is going on the lowest level in three years. So is that a clear signal, Ella? Does that mean investors suddenly got a lot happier with the Trump administration and will reward them with lower borrowing costs? No, that won’t get written? How weird.
The yield curve is steepening because of deeper uncertainty over the future trajectory of the policy rate. That’s basically it. All the narratives about confidence and investors demanding more from a chaotic government are just made up by the media.
The narratives don’t mean anything, and will inevitably backfire when rates get cut because when yields fall the implication will be that the market likes fascist idiots trying to consolidate all power.
If you zoom to max you can see that it was about this level during the late 90s before the bubble. The issue is that since then we have a much higher debt to GDP ratio and much larger government debt every fiscal year. A similar level to the late 90s or God forbid the Volker 80s will cause the entire system to be shaken. However the current fiscal policy in the US doesn’t seem to be changing. It seems only a fiscal crisis where the fed loses control of long term rates as happened in the late 70s is coming. This can only be solved via very high interest rates and or punishing federal cuts. The only difference between now and then is the rise of the Asian export led economies that seem to absorb or slow down inflation. However if this changes with more consumption in Asia or less production in China and Asia then we will see the same type of situation as in the 70s.