Interest Rates 02 (Nov 14 - Dec 25)

[winston]

Traders look for US$10 million payout in bet on 5 pc US yield

The US 10-year yield was steady at 4.52 percent at 5:35 a.m. ET but remained higher on the week. If sustained, that would bring to an end a a four-week streak of declines.

Source: Bloomberg

https://www.thestandard.com.hk/breaking ... c-US-yield

[winston]

The reversal of bond yields’ multi-decade direction

by Jeff Clark

Long-term interest rates peaked in 1982, with the 30-year Treasury Bond yielding 14%.

Rates then declined for the next 40 years – hitting as low as 0.4% during the COVID crisis in 2020.

In the last three years, the 30-year Treasury yield broke out above a 40-year declining resistance line.

Interest rates are up 60% since 2022 – and 1,100% higher than their 2020 lows. Borrowing money now costs 11 times more than it did five years ago.

If this bond direction continues, it will be a headwind to stock returns that we haven’t faced in about 45 years.

The U.S. government – with $9 trillion of its $36 trillion national debt due to mature in 2025 – for lack of a better word… is screwed.

All of that debt will be refinanced at higher interest rates.

The U.S. Treasury’s annual interest expense passed $1.117 trillion last year, making it the second-largest government expense on record.

The national debt has grown from less than $1 trillion in 1982 to almost $37 trillion today, and nothing bad has happened.

Source: Investor Place

[behappyalways]

NIRP Is Back As Swiss National Bank Cuts Rates To Zero, Introduces Stealth Negative Rates
https://www.zerohedge.com/markets/nirp- ... tive-rates


Liquidity Floodgates Open As 3 Central Banks Unexpectedly Cut Rates In Under 24 Hours
https://www.zerohedge.com/economics/liq ... r-24-hours

[behappyalways]

Jamie Dimon warns that investors are assuming rates are going down, but says they could surprise and go higher. Highlights deportations of farm workers, hotel workers and tariffs as the cause for a coming inflation spike.
https://x.com/GarethSoloway/status/1943658049602007094

[winston]

Mega trends could drive more elevated interest rates over the longer term

High trade tariffs and weak sovereign credit, will exert upward pressure on interest rates

by Leslie Yee

In the near term, interest rates could go lower, possibly to counter slowing economic growth. However, over a longer horizon of several years or more, might the risk be that interest rates are far higher than today?

1. Bond markets may increasingly baulk at rising debt levels in the US and other leading economies.

2. The deflationary effects from China supplying cheap manufactured goods to the rest of the world and from falling trade barriers creating more efficient supply chains, is behind us.

3. America’s imposition of high trade tariffs on trading partners will create more fragmented and inefficient supply chains, which in turn drives prices higher for consumers in the US and globally.

4. The productivity gains and positive effects of lower costs of goods and services from the growing use and power of artificial intelligence (AI) might not be hugely significant.

5. The effects of the baby boomers, defined as those born between 1946 and 1964, driving demand for stocks and bonds in the US and Western Europe, will fade as their numbers dwindle.

6. while bonds remain a core component of investment portfolios, the weakening credit profile of many sovereign issuers coupled with rising geopolitical tensions, could push investors to hard assets such as gold and other precious metals instead of government bonds.

7. The weakening credit profile of many sovereign issuers coupled with rising geopolitical tensions, could push investors to hard assets such as gold and other precious metals, instead of government bonds.

Source: Business Times

https://www.businesstimes.com.sg/opinio ... onger-term