The 10-year T-Note yields 371bps over what has become a near non-existent S&P 500 dividend yield.
The latter has dwindled to 1.08%. This is partly a function of bull market valuations and partly a function of the societal rise in buybacks. A 24-year wide here... Source: Jeff Weniger
Junk bond spreads just dropped to 2.6%.
Investors are getting paid almost nothing extra to hold the riskiest corporate debt in America. That is near the tightest level of the entire cycle. Credit always cracks before equities. So far so good. Source: Kurt S. Altrichter, CRPS®
European Bonds Suffer the Most as Investors Fret About Energy and Elections
Source: Bloomberg
Junk bonds are pricing in perfection.
High-yield spreads have fallen to just 2.66% above US Treasuries—close to their tightest level in years and roughly half the historical average. That leaves almost no margin for error. Yet the labor market is slowing, fiscal deficits remain near 6% of GDP, and economic risks are building. Credit markets often crack before equities notice. At a 2.66% spread, investors are receiving very little compensation for default and liquidity risk. If spreads widen, financial conditions could tighten quickly—and stocks may feel the impact soon after. Source: Kurt S. Altrichter, CRPS®
The US Treasury could buy back over $34 BILLION of its own debt in September alone.
This week alone carries up to $14.5 BILLION in capacity, with the program doubling in size on September 9. The 30-year yield sits near a 20-year high, with the government now spending over $1 TRILLION a year just on interest. Treasury Secretary Bessent insists the goal is liquidity, not controlling yields, saying "I have not bought anything yet." Source: coinbureau
The French 10-year bond yield reached 4.27% yesterday (Thursday)
If this continues, the ECB will print many new colorful euros. The first euro crisis triggered by Greece was about hundreds of billions. France is about trillions (3.53 trillions euros to be precise). Source: Michel A.Arouet
3rd September could be a major test for the U.S. Treasury market.
At 1:40 p.m. ET, the Treasury is scheduled to buy back up to $12.5 billion of its own debt. The market reaction will matter: If yields fall, the operation may be helping absorb some of the enormous supply hitting the market. If yields continue rising, the message could be more concerning: $12.5 billion may simply be too small relative to the amount of debt investors must absorb. This buyback is not just another Treasury operation. It is a live test of whether buybacks can meaningfully relieve pressure in the world’s most important bond market. Set your calendar: 1:40 p.m. ET. Source: Nic
Hyperscaler yield curves
Source: Global_Macro
