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Long-Bond Drama Reignites 60/40 Debate
There's no shortage of handwringing over the dollar's recent decoupling from Treasury yields.
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I’ve had most of the fixed income allocation in short duration, for the past three years, since T-bill yields came off the ZLB floor. Most of the yield and none of the duration risk. The exception is tax-advantaged bonds that will be held to maturity and a handful of high-grade non-callable perpetual preferreds.
I didn’t have much success finding out who buys 30y treasuries. I assume it’s insurance mostly (pensions, life insurance and other countries treasuries). Who does buy them?
That’s mostly it.
“Now who’s ready for Thursday’s $22 billion long bond sale?”
I am. If this week’s trade talks with China go poorly, Thursday’s bond sale could prove interesting. Also, I live in SoCal. Trump has called-up the National Guard here to deal with protests against ICE’s immigration raids. Potentially televised clashes between protestors, federal agents, and National Guard troops are not a good look for national stability either.
Nor are the President’s threats of unspecified retribution against Musk if he dares fund primary challengers against legislative supporters of his Big Beautiful Bill.
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He is one-upping Mr. Orban. But his base holds strong as he delivers on deportations and the erasure of the cancer of wokeism, especially the giant percentage of transgender athletes infiltrating high school girls locker rooms and elementary school classrooms.
H-Man, the big problem we have is that China owns REE and it is our lifeblood. How could POTUS start a war on tariffs knowing they have us by the balls? REE runs everything.
Related note, Trump seems likely to soon anoint Warsh as successor and “shadow” Fed Chair in hopes of sidelining Powell. Perhaps he hopes Warsh will convince investors that big cuts are coming in 2H26 and thus bring yields down now. That is a year away and Warsh will hold only one vote on the FOMC, so it seems tenuous for typical long bond buyers will accept lower yields now in hopes of lower yields later. A lot can happen in a year. Anyway, is Warsh really the most convincing future rate-slasher?