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The Treasury-bond rout that's rattled US markets this month is forcing investors to zero in on the government's spiraling debt. The accelerated increase in America's indebtedness has already sparked concern for investors in 2023, with lawmakers only narrowly avoiding a catastrophic default in June thanks to President Joe Biden and then-House Speaker Kevin McCarthy brokering an 11th-hour deal to raise the federal borrowing limit. Now, some of Wall Street's best-known names are raising the possibility that so-called "bond vigilantes" – who dump fixed-income assets in a bid to stymie what they see as imprudent policymaking – have helped fuel the...

US 10-year yields are rising at a rapid pace. US 10-year yields have risen to 4.70% from 4.0% since early August. The moves have come despite stable market-measured inflation and Fed expectations. Aside from some moderate underlying strength, there haven't been any big economic surprises either. The scariest part about it is that there's no good explanation for why it's happening.Lately, there's been some hope that it was quarter-end or some kind of one-off puke but with two auctions missing this week (including today), it's increasingly clear that real-money demand just isn't there. There are scenarios where this blowout isn't...

Michael Pento discussed the current state of the bond market and warned of the potential collapse of the US dollar due to the erosion of faith in the world’s reserve currency. He advised investors to sell long duration bond exposure and invest in short term US government debt. Pento also discussed the inflation and GDP acceleration, as well as China and Japan’s selling of US treasuries. He warned of the massive issuance and supply of US debt and questioned who will buy it, as the Federal Reserve is no longer buying and is instead selling their balance sheet, adding to...

Underlying strength in the bond market is signaling that the US economy is not on the verge of entering a recession anytime soon, according to a Monday note from DataTrek Research. In fact, corporate bond-yield spreads relative to US Treasuries suggest the economy is not going to enter a recession in 2023 or 2024, according to the note.

MARKET EXTRA The Federal Reserve on Friday confirmed what many investors were saying for some time: the $24 trillion Treasury market has been experiencing low levels of market liquidity in recent months. The central bank has been rapidly increasing interest rates since March as part of a fight to bring inflation down from a 40-year high. The hope has been that such steps can cool consumer demand enough to tame prices, without throwing the economy into a painful recession, or spark a financial crisis. But since May, cracks in liquidity in Treasurys, the biggest, deepest part of the U.S. bond...

<p>Profits and losses aren’t usually thought of as a consideration for central banks, but rapidly mounting red ink at the Federal Reserve and many peers risks becoming more than just an accounting oddity.</p><p>The bond market is enduring its worst selloff in a generation, triggered by high inflation and the aggressive interest-rate hikes that central banks are implementing. Falling bond prices, in turn, mean paper losses on the massive holdings that the Fed and others accumulated during their rescue efforts in recent years.</p>

As The Federal Reserve tries to drain-off the extraordinary growth in its balance sheet since COVID without raising its target rate (good luck with that!), it is time to appraise where we are sitting. First, liquidity. Let’s look at the ongoing saga of Chinese conglomerate Evergrande (mainly known as a large real estate developer). Their 8.25% bond has plunged to $23.481 on speculation of a catastrophic default on their bond payments. Then we have Invesco’s Golden Dragon China ETF (measuring a diversified market cap of US-listed companies headquartered or incorporated in China & derive a majority of their revenues from...

The price index tracking consumer spending — the PCE price index — was up 4.3% over the 12 months ending in August. That was a faster pace than July's 4.2%. Inflation continued to run at the fastest pace since January 1991. The PCE inflation gauge is one of many, and they're not all pointing in the same direction: The consumer price inflation index came off a 13-year high in August, for example. But the PCE index is the Federal Reserve's preferred measure of inflation. Although prices rose sharply, American incomes increased at only a modest pace, up 0.2% or $35.5...

This isn’t as much hyperbole as it sounds: the main reason investors bought bonds issued by Chinese state-backed companies is an implicit guarantee from default by the local or provincial government. That belief has been shattered by a recent spate of defaults by major Chinese state-owned companies. Yongcheng Coal and Electricity Holding Group, a state-owned coal company, defaulted on a $152m bond in November. At the time of the default, Yongcheng was a AAA-rated company by Chinese domestic credit rating agencies. This became, pun unintended, the proverbial canary in the coal mine. Shortly thereafter, Tsinghua Unigroup, a state-backed technology company...

With US Treasury yields capped around 0.90% amid concerns that in the absence of fiscal stimulus the Fed will need to step in with more easing (either in the form of extending QE maturities, or an outright expansion in QE), China is facing a different set of challenges and following the recent rout in the bond market following several unprecedented SOE defaults, overnight the Chinese 10Y yield rose another 2bps to 3.36%, and almost 90bps from the all time low of 2.48% hit in April.As a result, the premium for China’s 10-year government bonds over U.S. Treasuries of same duration...

The Fed announced Tuesday morning that it would be establishing a repurchase agreement facility for foreign and international monetary authorities (FIMA) that have accounts at the central bank’s New York branch. Through the FIMA repo facility, other central banks and monetary authorities unable to make smooth trades in the open market will be able to temporarily liquidate their positions in Treasuries.

Support for critical market functioning. The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. The FOMC had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. In addition, the FOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases. Supporting the flow of credit to employers, consumers, and businesses by establishing new programs that, taken together, will...

What are negative interest rates? A negative interest rate is exactly how it sounds — it’s when an interest rate (or a yield) falls below 0 percent. It seems counterintuitive. After all, how can a rate actually fall below zero, a number that’s literally meant to be a floor for traditional borrowing and lending activities? Take Germany, for example. Its government bond yields are trading in the negative territory all the way out to 20 years. Bond yields are negative in France, Denmark and the Netherlands right now, and they were once sub-zero in Belgium. The Riksbank of Sweden, the...

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus. Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days. The Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated...

The 10-year Treasury yield dropped to another record low on Monday below 1.04% as the historic decline in U.S. rates continued amid the coronavirus outbreak and Wall Street calls for Federal Reserve stimulus.

The yield on the benchmark 10-year Treasury note skidded to a new low Thursday as concerns over the impact of the coronavirus dogged financial markets around the globe. The 10-year Treasury yield dropped five basis points to below 1.25% for the first time ever while the 30-year yield slipped a similar amount to 1.747%. The 10-year rate has fallen 20 basis points since Monday in a reflection of global demand for the relative safety and positive yield U.S. debt offers. Bond yields fall as prices rise. The move lower in yields also reflects traders’ expectations the Federal Reserve will step...

NEW YORK (Reuters) - A closely watched bond market phenomenon has again flashed yellow, but investors are loathe to give it much weight. Yields on the 10-year Treasury note briefly fell below those of the 3-month bill early Tuesday for the first time since October, on concerns over the economic impact of the coronavirus. An inverted yield curve has historically been an indicator of looming recession as it tends to reflect worries over future growth among bond investors. However, worries about the coronavirus have so far done little to shake the upbeat growth views many investors and analysts had going...

*** The bond market is taking on the Fed, betting the Fed is mistaken in its view that it does not need to cut rates very much, strategists say. *** The market is betting inflation will be much lower than the Fed expects it will be, and that will force the Fed to keep cutting rates. *** Stunning moves across the Treasury curves sent yields sharply lower, and the benchmark 10-year yield was edging toward a 3-year low, while stocks rose sharply in response. The bond market is bent on having its way and is now pricing in a Fed...

Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said on Tuesday he expects the Federal Reserve to begin a campaign this month of "old school" sequential interest rate hikes until "something breaks," such as a U.S. recession. Gundlach, who oversees more than $101 billion at Los Angeles-based DoubleLine, said U.S. economic data support a rate increase as soon as the next Fed policy meeting on March 14-15, and further rises this year, after a series of false starts in 2015 and 2016. "Confidence in the Fed has really changed a lot," Gundlach said on an investor webcast. "The Fed has...

Not only will Donald Trump win the November election, but his victory will propel U.S. economic growth higher, according to Jeffrey Gundlach. Trump will fuel a debt-driven increase in government spending, which Gundlach said will push GDP growth to levels reminiscent of the Ronald Reagan era. Gundlach did not endorse Trump or say whether he would vote for him. Gundlach spoke to investors on June 14 to provide updates on the DoubleLine Total Return Fund (DBLTX). He is the founder and chief investment officer of Los Angeles-based DoubleLine Capital, known for its fixed-income mutual funds, closed-end funds and ETFs. Copies...