What Need to Know about US Treasury Bonds
2022.12.08 00:54
What Need to Know about US Treasury Bonds
Budrigannews.com – Ten-year yields rarely drop 11 basis points, break a significant chart barrier, and reach three-month lows for no apparent reason.
The downward revision to US labor costs for the third quarter has been blamed by some. However, Q3 is a distant memory, and only GDP nerds are aware of labor cost indices.
Although the data on China trade were awful, the services ISM and U.S. November payrolls both surprised on the high side and ought to be more important for Treasuries.
It is true that the Bank of Canada was able to be both hawkish and dovish by raising interest rates by 50 basis points while indicating that it may be nearing the end of tightening. However, the Fed will still raise rates by 50 basis points next week, and the majority of analysts anticipate a higher set of FOMC dot plots for rates as a protest against the recent easing of the financial markets.
And what an improvement it has been. Ten-year yields have decreased by 90 basis points to 37 basis points below the cash rate since the Fed’s November 75bp increase, while 10-year fixed mortgage rates have decreased to 6.07% from 6.67%.
Naturally, Fed Chair Powell was to blame for a lot of this, as he missed an ideal opportunity to vigorously oppose the easing last week and it is still unclear why.
Central bankers might be alarmed by the sudden uptick in concerns about a recession. Treasuries aren’t just bystanders in this case; in fact, the more inverted the curve gets, the more those worries seem to be true.
There was a saying that the Treasury curve had predicted five of the last two recessions, but now no one seems to doubt its ability to foretell pain. So the fear of a recession is the reason long-term yields are falling?
The friend truly desires to know.
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Important developments that could have an impact on the markets on Thursday:
– At 3 p.m. local time (0.700 GMT), the health authorities of China will hold a press conference about COVID-19 prevention and control measures.
– Weekly jobless claims in the United States are expected to rise to 230,000, but they typically fluctuate this time of year.
– Various central bankers from the ECB, Riksbank, and Bank of Canada made appearances.
