BREAKING: 30-Year Treasury Yield hits 5% for the first time in 16 years while the 10-year hits 4.8%
Macro fundamentals and inflation fears are not the only culprit. Indeed, the slide in Treasuries now seems excessive given recent economic data and Federal Reserve policy. This could suggest it’s instead being driven by fears over the swelling US deficit. As show on teh chart below (Bloomber), the supply/demand balance context is clearly not favroable to US Treasuries. The recent move shows rising alarm at what fiscal policymakers are doing. Concerns over U.S. debt levels and large Treasury issuance have prompted investors to demand more compensation for the risk of holding long term bonds, driving long-term yields higher. Source: Bloomberg
The gap between NASDAQ and the US 10 year (inv) remains absolutely massive
Source: TME
EXTREME FEAR ?
-> Stock Market Fear & Greed Index falls to 16, the most fearful its been in the last year. Meanwhile, only 8% of $SPX stocks are currently trading above their respective 50-day moving averages, representing a 2%ile move over the last decade... Source: barchart
House ousts Kevin McCarthy as speaker, a first in U.S. history
This is likely to add to bond and equity markets volatility. OUR TAKE - This is a big event, at least politically. The House has no Speaker and business can be conducted until a new Speaker is installed. - There is a risk that this is an event for financial markets. The recent rise in bond yields is being driven by a lot of factors and political dysfunction is probably one of them. The US debt servicing cost has hit the inflection point for austerity at the same time basic governing is proving to be impossible. - More bond and equity markets volatility are likely Source: CNBC
According to Reuters, the US currently has just 17 days of supply left in the Strategic Petroleum Reserves (SPR)
This is roughly half the historical average of ~33 days dating back to 1990. Meanwhile, oil prices are still almost 30% above the target price the US is set to refill… Source: The Kobeissi Letter
Credit Card Delinquency rates at small banks have reached 7.51%, the highest level ever recorded
Source: FRED
Rising bond yields is hurting US banks and it starts to show up in the CDS- see below.
With US Treasuries at 5%, Bank of America is close to 45x levered, at 6-7% infinitely levered. Maybe the Fed should have stress-tested the banks not only on credit quality but also duration... Source: Lawrence McDonald
Arm takes the spotlight as the largest 2023 IPO, a year that has been almost deathly quiet for I.P.O.s.
The chip designer, which is owned by SoftBank, had priced its offering at $51 a share, raising $4.87B. Source: Genuine Impact
