Q2 Fixed Income Review Chart: US Treasury Yields Resilient Amid Mixed Economic Signals!
As the second quarter of 2024 unfolded, a noticeable normalization of the US economy became evident, marked by a significant downturn in the US Citi Economic Index from 33 to -29, reaching its lowest level in nearly two years. Despite these economic headwinds, the 10-year US Treasury yields closed the quarter slightly higher at 4.30%, a 10-basis point increase. This apparent contradiction between economic normalization and rising yields can be largely attributed to substantial US Treasury issuances, necessary to fund the expansive US fiscal deficit. Furthermore, persistent inflationary pressures have prompted the central bank to delay the anticipated rate cut from July to November 2024, adjusting expectations amid changing economic conditions. As we approach a typically low-liquidity summer period, any shifts in interest rates could be magnified. Additionally, with the US presidential election on the horizon, market sentiments could be further influenced by electoral outcomes. The looming question is: Which will have a greater impact on third-quarter rates—the slowdown in the US economy, the ongoing inflationary and supply pressures, or the unfolding political landscape? #Finance #Economy #TreasuryYields #EconomicIndicators #Inflation #FiscalPolicy #InterestRates #USPresidentialElection #MarketAnalysis Source: Bloomberg
France vs German 10 year spread keeps moving even higher...
Source: The Market Ear
BREAKING 🚨: U.S. Treasury Market
Treasury liquidity is now at its worst point in AT LEAST the last 14 years, surpassing even the onset of Covid Source: Barchart, Robin Brooks
Net inflow to TLT! Is the rate cut hope-timism back?
Source: Andreas Steno Larsen, Steno Research, Macrobond
The end of ice age... Will we come back one day to a world of negative yielding debt???
Below chart shows the USD Market Value of negative yielding debt. It peaked above $18T after Covid... Source: Bloomberg
According to Nikkei, Japans Norinchukin Bank:
Japan's 5th largest bank with $840 billion in assets - will sell more than 10 trillion yen ($63 billion) of its holdings of U.S. and European government bonds during the year ending March 2025 "as it aims to stem its losses from bets on low-yield foreign bonds, a main cause of its deteriorating balance sheet, and lower the risks associated with holding foreign government bonds."
US 10 year yield breaks <4.3% on PPI.
The producer price index unexpectedly declined the most in 7mths, adding to evidence that inflationary pressures are moderating. The odds of a Fed rate cut in Sep shot up to 65% following PPI reading. Source: Bloomberg, HolgerZ
France 10y risk spread over Germany keeps rising. Jumps to 62bps.
Source: HolgerZ, Bloomberg
