Why is it happening?
With Interest Expense soaring and US debt/GDP at 125% & rising, the only way the US can keep USTs nominally money good are via negative real rates. hence the gold outperformance. Source: Bloomberg, Luke Gromen
It seems the stock markets haven’t yet recognized that equity risk premiums have turned negative.
The yield on the 10y US bond is now higher than the earnings yield of the S&P 500... Source: HolgerZ, Bloomberg
Another poor US Treasuries auction yesterday.
This was the trigger that pushed yields higher (despite oil prices crashing -6%...) Bond yields no longer have much to do with how strong/weak the economy is. It’s all about deficits, high government spending, and huge Treasury auctions. Source: QE infinity
The next 10 days could be a big deal for bonds
Source: Markets & Mayhem
The move in bond yields after the 50bp cut is very out of the ordinary.
Source: Andreas Steno Larsen @AndreasSteno on X
The 10 year bond yield soared on Monday, closing i on 4.2%.
The rise in bond yields took stocks down with them. Has the Fed lost control of the bond market? Was the Fed jumbo rate cut a policy mistake?
Druckenmiller is shorting U.S. Treasuries with a record setting 20% of his portfolio.
He knows what's about to happen ("Interest rates could double from here.") Source: Financelot @FinanceLancelot on X
A fascinating chart by James Bianco ->
The 10-year yield (blue) and Trump's Political Betting probabilities (orange). The chart starts the day Biden dropped out. Coincidence, or are these series related? If they are related, what happens to 10-year yields if the orange line (man) goes to 100 in 14 days? Source: Bianco Research
