And Now, A Brutal Bloodbath In Bonds

And Now, A Brutal Bloodbath In Bonds

Bonds were certainly due for a breather, and they took one on Thursday following the best month for US government debt since 2008. A string of upbeat data stateside, optimism on trade and a deluge of corporate issuance conspired to push yields sharply higher across the curve. At the short-end, 2-year yields were cheaper by nearly 14 bps at one juncture. I missed the peak, but Bloomberg's Luke Kawa nearly captured it. (Bloomberg) Trump appeared to turbocharge things with a tweet about "real
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10 thoughts on “And Now, A Brutal Bloodbath In Bonds

  1. Really interesting scenario – a green shoot for econ/equity -> disorderly liquidation of bonds -> abrupt tighteninging -> brown fungus for econ/equity?

  2. I know, it’s nuts right? The Swiss 30 year is yielding -0.41 today. I kept refreshing my browser and had to pinch myself to make sure this opportunity was real…

  3. Bond action today in UST Treasury market also reflects the humongous amount of corporate bonds being issued this week and next and still lower liquidity post labor day week. A pull back was warranted but these technicals are making it worse- add in an upcoming ust auction. A move back to 1.70% on 10s would not be surprising nor would a rally later in the month to new highs…

        1. I see you followed up with an article on corporate bonds later today. Thanks for the list and the post with the exact issuance and context for the size as well. My understanding from my street contacts is next week is also slated to be heavy issuance week as well. Corporate bonds and municipal bond markets are often a better gauge of the fixed income markets since they issue at discretionary times in most cases. The federal government runs deficits that must be rolled over so the issuance is fixed in a sense. And central banks generally use US Treasury bonds to seek to hold reserves and are uneconomic driven buyers in a sense. So the corporate and municipal markets are often a better indicator of the true states of the bond markets.

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