A turn in the trend? US 10-year Treasury yield has risen ~440 basis points over the last 5 years to 4.76%.
If this trend continues that will materially shift the investing landscape with many investors being caught off guard. Source. Bloomberg, Global Markets Investor
This chart is $IEI iShares 3-7 years Treasury Bond ETF / $HYG iShares iBoxx $ High Yield Corporate Bond ETF
Clearly not indicating any major credit risk! Maybe the market isn’t pricing in a credit crisis because there isn’t one to price in... Source: @cfromhertz on X
The $TLT chart shows a significant 52% decline from its peak, highlighting the harsh effects of increasing rates.
Investing in long-duration US Treasuries is advisable only under specific circumstances: - When a recession is on the horizon. - When inflation is quickly slowing down. Currently, neither of these scenarios is unfolding. Source: Kurt S. Altrichter, CRPS® on X
BREAKING: The difference between the S&P 500’s earnings yield and BBB-rated corporate bond yield has dropped to -1.9%, the lowest in 15 years.
Excluding a brief period in 2009, this is the lowest level in 23 years. The gap has fallen by 4 percentage points over the last 5 years as US interest rates have risen sharply. In other words, less risky investment-grade corporate bonds now pay a higher yield than S&P 500 companies' profits relative to their stock prices. This metric suggests the market may be overvalued. Can this gap continue to widen? Source: Bloomberg, The Kobeissi Letter
OUCH! UK 10y yields rose as much as 14bps to 4.82%, highest since Aug. 2008
Source. HolgerZ, Bloomberg
Yields spike after somewhat hot US economic data with US 10y now at 4.67%:
ISM Prices Paid Index came in higher than expected, signaling potential future inflation. At the same time, JOLTS job openings unexpectedly increased, with previous month's data also revised upward. Source: Bloomberg, HolgerZ
10-Year Treasury Auction was awarded a 4.68% yield, the highest since 2007 🚨
Source: Barchart
Yields on 10-yr Treasuries are now the highest vs 2-year rates since 2022.
It's unclear whether this is a healthy normalization - a reversion back to the typical relationship of long-term yields being higher than short-term ones - or a sign of stickier inflation and deficit fears. Souce: Bloomberg, Lisa Abramowicz
