The Bloomberg Global Long Bond Index yield has surged to around 4.2%, its highest level since July 2008.
Long term government borrowing costs are now back at levels last seen during the global financial crisis. The good news is that bond yields are rising alongside earnings growth and real GDP growth upside revisions. The bad news: with governments carrying far more debt today, higher yields are making refinancing increasingly expensive. This could become a major pressure point for global financial markets. Source: Bloomberg
In case you missed it.. Japan’s economy expanded 1.1% in the second quarter on an annualized basis, missing expectations for 2% growth as softer domestic demand offset strong exports.
This is the first full quarter to include the impact of the Iran war, which has brought energy prices higher for business and households. Source: CNBC
The Fed is buying US Treasury bills (i.e short dated US government bonds) at a faster pace than during Covid.
- Covid: ~$320B - Last 7 months: ~$290B In just 7 months, the Fed has already bought almost as many Treasury bills as it did during Covid. In other words, the Fed is printing money to buy UST bills, thereby suppressing yields... How long until they will implement YCC? Source: Lukas Ekwueme
Just 8% of U.S. consumers expect their income to outpace inflation next year.
Source: Hedgeye Bloomberg
Our global M2 proxy was flat last week, close to its record high level (the DXY index was flat too). The S&P 500 continues to catch up and suggests the relationship between the two is not broken.
In orange: Global M2 with an 11 weeks lead In dark blue: S&P 500 index Proprietary model developed by our Head of Fixed Income Adrien Pichoud
The new AI infrastructure stack
Piper Sandler mapped the new AI infrastructure stack across 8 layers from the power grid all the way to the agent as AI scaling creates bottlenecks across power, cooling, networking, storage, cloud & inference: Source: Shay Boloor Piper Sandler
A nightmare chart for Germany
Source; Robin Brooks
The longest duration bond ETF is now down 63% from its peak in March 2020.
How is that possible? The 30-Year Treasury yield has moved from an all-time low of 0.8% in March 2020 up to 5.3% today. Long duration + Rising interest rates from all-time low levels = Pain Source: Charlie Bilello
