New York Times (November 6)
“President Trump’s barrage on global trade appears to have taken a hit” during questioning in front of the Supreme Court. “Concerns are growing that the Supreme Court could scramble the Trump administration’s tariffs strategy. That may be welcome news for free-trade advocates, but it could also unleash more uncertainty for businesses and Wall Street.” Market reaction was rapid as “the yield on 10-year Treasury notes spiked to 4.15 percent,” a sell-off that suggests “bond holders are fretting that an adverse ruling could deprive the government of revenues needed to offset the federal deficit.”
Tags: Barrage, Bond holders, Businesses, Free trade, Fretting, Global trade, Market reaction, Revenues, Scramble, Sell-off, Supreme Court, Tariffs strategy, Treasuries, Trump, Uncertainty, Wall Street, Yield
The Economist (April 10)
“For a good few hours on April 9th, disaster beckoned. Share prices had been falling for weeks. Then the market for American Treasury bonds—normally among the safest assets available—started convulsing, too. The yield on ten-year Treasuries leapt to 4.5%…. That meant bond prices, which move inversely to yields, had cratered. The failure of both risky and supposedly safe assets at once threatened to destabilise the financial system itself.”
Tags: April 9, Bonds, Convulsing, Cratered, Destabilise, Disaster, Failure, Financial system, Market, Risky, Safe assets, Share prices, Threatened, Treasuries, U.S., Yield
Barron’s (December 16)
“Investors betting on future interest rate moves expect the Fed to cut rates a quarter-point, ending 2024 with a federal-funds rate in the range of 4.25%-4.5%.” That not something bond investors like. They are increasingly “shunning long-term Treasuries,” with the yield on 10-year Treasuries moving beyond the “20-day moving average of 4.293% on Thursday,” before “topping 4.4% during intraday trading on Friday.”
Tags: 10-year Treasuries, 4, 4.293%, Bond investors, Fed, Federal-funds rate, Future, Interest rate, Intraday trading, Investors, Shunning, Yield
Bloomberg (December 20)
“It is hard to overemphasize the importance of” the BOJ’s latest “policy change. Starved of yield domestically and with the yen on a vicious weakening trend, Japanese investors have turned to bond markets elsewhere where yields are higher…. This change in policy is likely to make the yen much less of a one-way bet.”
Tags: BOJ, Bond markets, Importance, Investors, Japan, Policy change, Weakening trend, Yen, Yield
Financial Times (July 4)
“If the BoJ sticks to its guns while the US Federal Reserve continues to raise interest rates, the yield divergence could spell a further collapse in the yen beyond the 24-year low. But if the BoJ moves to tweak its monetary policy, or if a global recession prompts a U-turn in US interest rates and a flight to safe havens, it could trigger an abrupt reversal.”
Tags: 24-year low, BOJ, Collapse, Divergence, Global recession, Interest rates, Japan, Monetary policy, Reversal, Safe havens, U.S.. Fed, Yen, Yield
The Economist (September 15)
“Debt stalks Africa once again. Over the past six years sub-Saharan governments have issued $81bn in dollar bonds to investors hungry for yield. Piled on top of this are murkier syndicated loans and bilateral debts, many to China and tied to big construction projects. Public debt has climbed above 50% of GDP in half the countries in sub-Saharan Africa. The risk of a crisis is growing.”
Tags: Africa, China, Construction projects, Crisis, Debt, Dollar bonds, GDP, Investors, Murky, Sub-Saharan, Syndicated loans, Yield
Wall Street Journal (June 15)
The yield on 10-year German bunds turned negative, a new low. “This is good for governments that want to finance spending on the cheap, but it’s not so good for the private risk-taking that drives economic growth. Negative interest rates reflect a lack of confidence in options for private investment. They also discourage savings that can be invested in profitable ventures. A negative 10-year bond is less a sign of monetary wizardry than of economic policy failure.”
Tags: Bunds, Confidence, Finance, Germany, Governments, Growth, Investment, Negative interest, Options, Risk-taking, Savings, Spending, Yield
Institutional Investor (August 27)
Gold is losing “its luster as an asset class.” Long considered a “hedge against inflation, currency volatility and geopolitical turmoil,” many experts are now questioning gold’s status as a legitimate investment. “Gold has failed to benefit from global economic and political turbulence recently…. Given that gold offers investors no yield, if it doesn’t rise in value during episodes like these, investors don’t have many reasons to hold it.”
Tags: Asset class, Currency volatility, Geopolitical turmoil, Gold, Hedge, Inflation, Investment, Investors, Turbulence, Value, Yield
The Economist (May 1)
Since 2010, foreign creditors “have extended the equivalent of more than $5 billion of 100-year bonds to Mexico in three currencies: dollars, sterling and now euros.” Moreover, Mexico has received exceedingly good terms (4.2%-6.1%) given its “distinctly spotty credit record.” This speaks volumes about the intensity of the global search for yield, but raises the inevitable question “what are the chances of investors, or their grandchildren, getting their money back?”
