1/6
What is the bond market signaling? And how to read it? A thread to detail.
This chart shows YTD 10-yr total return each year since 1973. Gray lines show past years’ returns, while the blue line shows this year’s returns. Through October 21, the 10-year has returned -5.60%.
What is the bond market signaling? And how to read it? A thread to detail.
This chart shows YTD 10-yr total return each year since 1973. Gray lines show past years’ returns, while the blue line shows this year’s returns. Through October 21, the 10-year has returned -5.60%.
2/6
Only 3 years posted worse total returns through Oct 21 – 2009 (worst), 1999, and 1994. 2021 is already one of the worst years in bond market history.
How much pain in the bond market does the transitory crowd demand before they acknowledge the market is signaling a problem?
Only 3 years posted worse total returns through Oct 21 – 2009 (worst), 1999, and 1994. 2021 is already one of the worst years in bond market history.
How much pain in the bond market does the transitory crowd demand before they acknowledge the market is signaling a problem?
3/6
Bond market volatility is also beginning to show signs of concern, as the next chart shows.
Bond market volatility is also beginning to show signs of concern, as the next chart shows.
4/6
The next chart shows the 5-year inflation breakeven rate is now at a new record.
The next chart shows the 5-year inflation breakeven rate is now at a new record.
5/6
A month ago, Powell said in his presser that the taper was coming in November. He said it again yesterday.
One month ago, the 10-year was 1.30%. The next day the bond ylds broke out (red line below). A month later = 1.70%.
10-year is ylds averaging a 10 bps rise/week.
A month ago, Powell said in his presser that the taper was coming in November. He said it again yesterday.
One month ago, the 10-year was 1.30%. The next day the bond ylds broke out (red line below). A month later = 1.70%.
10-year is ylds averaging a 10 bps rise/week.
6/6
Many believe the yields have been driven by the Fed’s $120B/month of QE buying. So, whenever the Fed began to remove this support, the bond market would be in trouble.
Since Powell’s taper announcement a month ago, isn’t this exactly what is happening?
Many believe the yields have been driven by the Fed’s $120B/month of QE buying. So, whenever the Fed began to remove this support, the bond market would be in trouble.
Since Powell’s taper announcement a month ago, isn’t this exactly what is happening?
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