May 16, 2018 | Daily JAM, Morning Briefing |
Not so long ago global cash seeking safety and liquidity was keeping the yield on the 10-year Treasury at 2.95% in spite of the huge budget deficit resulting from the December Tax Cuts & Jobs Act and the flood of bond sales by the U.S. Treasury and the prospect of more interest rate increases from the Fed. But now in the last two days 10-year Treasury yields have tacked on almost a full tenth of a percentage point and today the yield on the 10-year Treasury closed at 3.10%.
April 30, 2018 | Daily JAM, Morning Briefing, Short Term |
The Federal Reserve’s preferred measure of inflation, the core Personal Consumption Expenditures index (Which excludes fed and energy prices) rose to an annual rate of 1.9% in March the Commerce Department announced this morning. That was inline with economist forecasts and market expectations. The yield on the 10-year Treasury fell to 2.94%. It stood at 2.96% on Friday.
April 29, 2018 | Daily JAM, Friday Trick or Trend |
Nobody expects the Federal Reserve to raise interest rates at its May 2 meeting. Or to be precise almost nobody expects the Fed to move. The odds of an interest rate increase by the Fed are just 6.2%, according to the CME Fed Watch Tool, which calculates the odds of a Fed move by looking at prices in the Fed Funds Futures market. In addition there’s no press conference scheduled nor will the Fed produce one of its updates of its projections on the likely performance of the economy. But this doesn’t mean the Wednesday meeting can’t swing the market.
April 23, 2018 | Daily JAM, Short Term, TBX |
Prices for 10-year Treasuries remained just strong enough to keep yield on this benchmark bond below 3%. Not much below 3%, granted. The high for the day so far is 2.996% as of 3 p.m. New York time. At 3 pm. the yield on the 10-year Treasury was 2.97%, up one basis point for the day.
April 20, 2018 | Daily JAM, Friday Trick or Trend, TBX |
The yield on the 10-year U.S. Treasury climbed to 2.95% today, up 4 basis points on the day. That equals the high yield for 2018 set back in February. The driver this time is an increase in commodity prices that has revived fears of inflation
April 13, 2018 | Daily JAM, Short Term |
It’s a recent development, but it looks like more foreign buyers are sitting out recent Treasury auctions. At Tuesday’s $30 billion auction of three-year notes, foreign buyers accounted for the smallest share of the offering since September.
March 28, 2018 | Daily JAM, Morning Briefing, Short Term |
The plunge in U.S. stocks and in technology shares in particular have sent Treasury prices up and yields down, breaking the 20-basis point range that’s held since early February. The yield on the 10-year Treasury fell 8 basis points on Tuesday and is down another 2 basis points today to 2.76% as of 12:30 p.m. Bond traders are watching for any signs that we could be looking at a replay of 2017.
March 20, 2018 | Daily JAM, Morning Briefing, Short Term |
Ahead of tomorrow’s interest rate announcement from the Federal Reserve, 10-year Treasury yields remain stuck just below 2.90%. The bond market just can’t seem to admit that the Fed might raise interest rates three times in 2018–let alone a potential four times–although I think it is gradually working its way toward that consensus.
March 16, 2018 | Daily JAM, Friday Trick or Trend |
With newly appointed chief White House economic advisor Larry Kudlow acting as a front man, Republicans in Congress are talking about another round of tax cuts to follow on the December Tax Cuts and Jobs Act. What Kudlow has called “Phase Two” would include making the individual tax cuts due to expire in 2025 permanent and reducing the capital gains tax rate.
March 15, 2018 | Daily JAM, Long Term, Volatility |
If you spend a significant part of your day staring at your computer to watch the markets, you know that, perplexingly, the traditional safe havens for mitigating portfolio risk haven’t been working very well. Now Goldman Sachs has put its computers and data crunchers to work and has reached the same conclusion as the anecdotal evidence suggested. Goldman has tagged this a period of “diversification desperation.”
March 2, 2018 | Daily JAM, Short Term, Volatility |
Do you think that in the fall out from President Trump’s announcement on Thursday of tariffs on imported steel (25%) and imported aluminum (10%) China’s Liu He, on a visit to Washington this week, might have reminded Treasury Secretary Mnuchin that the U.S. needs to sell somewhere around $1 trillion in new Treasury debt in 2018 to pay for things like the Tax Cuts and Jobs Act and that China, the prime target of those tariffs on steel and aluminum, is one of the globe’s largest holders and buyers of U.S. Treasuries?
February 27, 2018 | Daily JAM, Volatility |
In the short-term, if bond traders and investors flee the euro and European bonds and pile into U.S. Treasuries, Treasury prices will up and yields go down despite any pick up in U.S. inflation. That would confound bond bears betting on falling prices and rising yields. So what are the odds of such a flight to the safety of U.S. Treasuries?
