As inflation moves back toward the Federal Reserve’s 2% target, investors and firm managers will be looking at market-based measures of inflation expectations to make their decisions. Treasury Inflation-Protected Securities, or TIPS, are one of those measures used to make such ... READ MORE >
Treasury bonds
The impact of expectations for Fed policy on the money and bond markets
After three months of what seemed to be disregard for the direction of Federal Reserve policy, the money markets are once more expecting a tightening of financial conditions. But it took a banking crisis to get there. The bond and credit markets in our estimation are pricing in a recession ... READ MORE >
Negative-yielding debt back above $15 trillion globally as risk of delta variant rises
Last year, the issuance of negative-yielding debt generally declined as the global economy prepared to reopen. It was a sign from the investors that the worst of the pandemic would soon be over. But over the past 90 days, a different story has emerged, as rising economic and social risks linked to ... READ MORE >
CHART OF THE DAY: Deflating the hype on inflation
As the economy continues to recover and is poised for a period of robust expansion, the conversation continues to shift toward the outlook for inflation. While we expect the year-ago effects brought on by the global pandemic to result in a period of moderate reflation in the economy, the longer-term ... READ MORE >
CHART OF THE DAY: The 10-year Treasury yield goes its own way
The yield on 10-year Treasury bonds rose above 1.3% four times on Wednesday before closing just below 1.28%. The securities continued to trade in that range on Thursday. This comes despite the Federal Reserve’s efforts to suppress the cost of borrowing. Fixed-income investors are clearly pricing in a ... READ MORE >
CHART OF THE DAY: The bond market’s assessment of governance and economic risk
The yield on 10-year Treasury bonds continues to move above 1%, reaching 1.15% last week for the first time since the end of last February, when the severity of the coronavirus outbreak was becoming apparent. The increase in long-term interest rates can be interpreted as an encouraging sign of ... READ MORE >
CHART OF THE DAY: Pandemic economics, in 14 charts
The bond market, and not the equity market, provides perhaps the best assessment of the future of the economy. And these days, no matter how you parse the data, the bond market is telling a clear story: The corporate sector and the broader economy remain at risk. This stress is bleeding into state and ... READ MORE >
Assessing the bond market ahead of the coming change to Fed policy
With the economy stalling out over the past six weeks, the U.S. Treasury market appears to have had an appropriate response to the direction of monetary policy, risk and uncertainties regarding fiscal stimulus, and foreign and domestic demand for Treasury bonds. It would appear that investors are ... READ MORE >
Will yields rise due to increased issuance of Treasury bonds? Let’s get the elephant out of the room!
Apprehension expressed by economic and financial pundits about potential runaway inflation and higher interest rates in the wake of the U.S. Treasury’s recent issuance of bonds is high. The concern follows the government’s plan to issue $3 trillion in fresh debt to help fund pandemic-era fiscal stimulus ... READ MORE >