Bonds 05 (Sep 17 - Dec 24)

[behappyalways]

A good watch

The yield on U.S. long-term government bonds is approaching 5%. Chen Fengxin analyzes the reasons behind it. "The pressure has just begun..."
美國長天期公債殖利率逼近5% 陳鳳馨剖析背後成因「壓力才剛開始...」【#風向龍鳳配】
https://m.youtube.com/watch?v=-nPGL-qIvxQ


Is this the greatest bond bear market of all time?
https://twitter.com/AyeshaTariq/status/ ... 4274662851

[behappyalways]

Treasury supply has risen sharply, and will keep rising. Foreign Treasury demand is not rising. At least, not at a pace that can offset the surge in supply.
https://twitter.com/jessefelder/status/ ... 4306625616


Ugly 3Y Auction Sees Slide In Foreign Demand, Biggest Tail Since February
https://www.zerohedge.com/markets/ugly- ... l-february

[behappyalways]

Stocks Plunge, Yields Soar After Horrific 30Y Auction Tails Most In Two Years
https://www.zerohedge.com/markets/stock ... -two-years

Treasury supply has risen sharply, and will keep rising. Foreign Treasury demand is not rising. At least, not at a pace that can offset the surge in supply.
https://twitter.com/jessefelder/status/ ... 4306625616

[behappyalways]

#Italy 10y risk spread over German 10y bunds back >200bps as budget day arrives. Italy PM Meloni to unveil tax-cutting 2024 budget today amid debt worries.
https://twitter.com/Schuldensuehner/sta ... 9809823179


To put things into perspective: US Treasury auction sizes will in 2024 increase on avg 23% across the yield curve due to higher deficits and debts. (via Apollo)
https://twitter.com/Schuldensuehner/sta ... 5388037314

[behappyalways]

Demand Vs supply.... More supply coming...

Warning: during FY 2024, which began Oct 1, expect to see frequent estimates of increased Treasury debt issuance, each of which likely to be followed by new, even higher estimates. This FY 2024 likely to continue to see escalating borrowing with long bond yields continuing up
https://twitter.com/Halsrethink/status/ ... 6105706591

[behappyalways]

Foreign share of UST T-Bill holdings (green line in top chart) from 50% in 2015 to 23% now.

Foreign share of UST note & bond holdings (green line in bottom chart) from 63% in 2009 to 33% now.
https://twitter.com/LukeGromen/status/1 ... 4788786291

[behappyalways]

Levered hedge funds have been one of biggest marginal buyers of USTs in recent months as part of the relative value basis trade.

Last month, "a senior exec at one of the world's largest HF's" told FT "If hedge funds stopped buying USTs, I don't know who would buy them."
https://twitter.com/LukeGromen/status/1 ... 8727870566

[winston]

Single Best Trade: Hedge fund manager Doug Kass gives his top pick now

My favorite trade is buying (TLT). TLT is the bond ETF iShares 20+ Year Treasury Bond ETF | TLT. It comprises Treasury securities with an average effective duration of about sixteen years with a yield of approximately 5.06%. This ETF is liquid (average daily trading volume of 52 million shares and about $37 billion is managed by the Fund).

I expect the domestic economy to begin to experience decelerating growth and morph into a mild recession in the first half of next year.

Interest rates should decline as the variable and lagged impact of tighter Fed policy should shortly be felt.

The geopolitical problems around the world could lead to a flight to safety - benefitting Treasuries by placing pressure on yields.

What could go wrong? The economy may remain resilient.

Source: The Street

https://www.thestreet.com/investing/sin ... pick%2Bnow

[winston]

Surge in US yields sparked massive outflow from Asian bonds in September

Source: Reuters

https://www.reuters.com/markets/asia/su ... 023-10-20/

[winston]

The 10-year US Treasury (UST) bond crossed 5%, the first in 16 years

There are multiple reasons for the rise in yields.

We believe the foremost trigger is the burgeoning US fiscal deficit.

Over the past 12 months, the deficit has swelled by US$1tr, contributing an incremental 3.7% boost to GDP.

The deficit was especially acute over the past 4 months as it surged by almost US$900bn.

Together with quantitative tightening, the supply of bonds absorbed by the public (or market) was an astonishing US$1.7tr. In contrast, it was only US$400bn a year ago.

The rise in fiscal deficit was positive for economic growth and equities. The downside was the continued climb in bond yields.

Source: Phillips