### Summary
The recent market sell-off and rising yields are not driven by rising inflation expectations but by rising real yields across the world, signaling a return to pre-Global Financial Crisis conditions.
### Facts
- Real bond yields are returning to their natural state as the easy credit environment since the Global Financial Crisis is reversing.
- Rising inflation expectations typically drive yields, but the recent market sell-off is caused by rising yields for long-term rates.
- Central banks are hiking rates and removing liquidity, reducing the supply of credit and raising interest costs.
- Rising demand for capital and geopolitical tensions are also contributing to the rise in yields.
- Market conditions now are more like they used to be before the Global Financial Crisis, while the post-2008 to 2022 era was the unusual period.
- Rising real rates are expected to impact public spending, household borrowing, and asset values, while pensions and savers may benefit.
- The return to positive real yields is a big shift closer to the historical baseline.
- Despite recession talk, there are few signs of a recession in the US, with GDP growth forecasted at 5.8% for Q3.
### Emoji
- 💸 The era of cheap debt might be over, and it can lead to a big shift for investors.
- 💰 Real bond yields are returning to their natural state.
- 📉 Rising yields for long-term rates are driving the recent market sell-off.
- 🌍 Real yields are rising across the world.
- 📉 The conditions we're seeing now are more like they used to be before the global economy imploded.
- 🏢 Assets boosted by easy credit will need to correct, including real estate.
- 💼 Rising real rates will impact public spending, household borrowing, and asset values.
- 💡 Pensions and savers may benefit from a rising real rate environment.
- 📉 Excess speculation can easily occur if stability requires pursuing significant risk.
- 🚀 The return to positive real yields is a big shift closer to the historical baseline.
- 🔍 Few signs of a recession in the US, with 5.8% GDP growth forecasted for Q3.
US bond-market selloff continues as resilient economy prompts investors to anticipate elevated interest rates even after the Federal Reserve finishes its hikes, leading to a 16-year high in 10-year yields and increased inflation expectations.
Global financial companies have sold $2 trillion worth of bonds in a record amount of time this year, with European lenders paying off central bank loans and Chinese firms strengthening their balance sheets amidst economic uncertainty.
The Chinese bond market is experiencing a significant shift due to concerns over China's economic growth prospects, including a bursting property bubble and lack of government stimulus, leading to potential capital flight and pressure on the yuan, which could result in increased selling of US Treasuries by Chinese banks and a rethink of global growth expectations.
Major companies are becoming more cautious about borrowing in a higher interest rate environment, leading to a decrease in corporate bond issuances.
The Federal Reserve's decision to hold interest rates and the possibility of rates remaining higher for longer may have triggered a sell-off in the US equities and cryptocurrency markets, with risk assets typically underperforming in a high-interest-rate environment.
Corporate bond markets in the U.S. and Europe typically move together, but investors are more focused on whether economies are strong enough for companies to meet debt obligations rather than the magnitude of economic growth.
The recent decline in the stock market is overshadowed by the more significant drop in US and foreign bond markets, indicating a fundamental shift in perception and a signal of higher interest rates globally.
Bitcoin and other cryptocurrencies are experiencing a slight increase, but the surging bond yields are causing pressure on digital assets as investors consider the impact of interest rates and Federal Reserve policies.
Government bond yields are spiking in the US, Europe, and the UK due to investors realizing that central bank interest rates may remain high for an extended period, and concerns over inflation and supply shortages caused by the retirement of baby boomers.
The global markets, including U.S. and Asian markets, are caught in a cycle of rising bond yields, a strong dollar, higher oil prices, and decreasing risk appetite, leading to fragile equity markets and deepening growth fears.
Investors are becoming increasingly concerned about sustained high interest rates, with the bond and foreign-exchange markets already showing signs of adjusting, and if stock markets do not follow suit, the coming months could be particularly challenging.
The Treasury market is leading the equity market as long-term yields rise to their highest level in 16 years, suggesting investors should pay attention to bond market movements for stock market trends, with an optimistic outlook for AI companies in the coming months.
Higher interest rates are here to stay, as bond markets experience significant selloffs and yields reach levels not seen in years, with implications for mortgages, student loans, and the global economy.
Rising interest rates, rather than inflation, are now a major concern for the US economy, as the bond market indicates that rates may stay high for an extended period of time, potentially posing significant challenges for the sustainability of government debt.
The U.S. bond market is signaling the end of the era of low interest rates and inflation that began with the 2008 financial crisis, as investors believe that the U.S. economy is now in a "high-pressure equilibrium" characterized by higher inflation, low unemployment, and positive growth. The shift in rate outlook has significant implications for policy, business, and individuals.
The bond market is causing concern for investors, particularly due to the actions of bond vigilantes who have increased control over the Treasury market and are pushing up yields. This has raised worries about the escalating federal budget deficit and its impact on bond demand and market clearing. The vigilantes have also left the high-yield corporate debt market untouched, leading to speculation about their views on government securities.
The selloff in Treasuries has intensified as yields reach multiyear highs on speculation that the Federal Reserve will continue raising interest rates, causing losses for investors and impacting stock valuations.
The Federal Reserve's shift towards higher interest rates is causing significant turmoil in financial markets, with major averages falling and Treasury yields reaching their highest levels in 16 years, resulting in increased costs of capital for companies and potential challenges for banks and consumers.
A bond sell-off is driving up government borrowing costs as the financial markets worry about high interest rates; yields on 30-year UK government bonds have reached 5% for the first time in a year, while the yield on 30-year US Treasures hit a 16-year high, causing a selloff that affected currencies such as the yen and rouble.
The slump in US Treasuries has caused a sell-off in emerging-market debt, resulting in the yield on bonds exceeding the earnings yield on stocks, a rare anomaly that historically signifies increased risk.
The recent surge in global bond yields, driven by rising term premiums and expectations of higher interest rates, signals the potential end of the era of low interest rates and poses risks for heavily indebted countries like Italy, as well as Japan and other economies tied to rock-bottom interest rates.
Barclays warns that the bond market will continue to sell off, and only a stock market crash can save bonds as the Federal Reserve is unlikely to intervene.
The sell-off in Treasury bonds with maturities of 10 years or more, which has caused yields to soar, is surpassing some of the most severe market downturns in history, with losses of 46% and 53% since March 2020, comparable to stock-market losses during the dot-com bubble burst and the 2008 financial crisis.
The surge in US Treasury yields, reaching their highest levels in over 15 years, is causing a selloff in government bonds, impacting stocks, real estate, and the dollar while pushing mortgage rates to over 20-year highs.
The chaos in the bond market is largely attributed to the Federal Reserve, as panic over higher interest rates has led to a selloff in long-dated Treasurys, although some market experts believe this panic is disconnected from market fundamentals and that interest rates are unlikely to remain high for long.
The fixed-income market is experiencing the "greatest bond bear market of all time" according to Bank of America Global Research, as the yield on 30-year US Treasuries hit a peak-to-trough loss of 50% and bond funds saw $2.5 billion in outflows, while shorter-dated paper and equity funds continue to see inflows.
The US bond market experienced a selloff due to strong US hiring data, raising expectations of further interest rate hikes by the Federal Reserve this year.
Long-term bond yields have surged as the Federal Reserve reduces its bond portfolio and the U.S. Treasury sells debt, contrary to the expectations of Wall Street and investors worldwide, but a research paper written by a University of Michigan student six years ago accurately predicted this scenario.
The bond sell-off that is currently occurring in global markets is raising concerns of a potential market crash similar to the one that happened in 1987, with experts noting worrying parallels between the two eras, due to the crashing bond markets, increasing debts, overstretched equity markets, and the end of a bull market, albeit with no fiscal room for policy makers to respond this time, raising the potential for a more catastrophic event, including soaring interest rates and increased national debt servicing costs.
The Treasury bond market sell-off has led to a significant crash, causing high yields that are impacting stocks, commodities, cryptocurrencies, housing, and foreign currencies.
The International Monetary Fund is closely monitoring global bond market developments, particularly the recent selloff of U.S. bonds, which could reflect a supply mismatch rather than concerns about interest rates or long-term risks.
Rising interest rates on government bonds could pose a threat to the U.S. economy, potentially slowing growth, increasing borrowing costs, and impacting the Biden administration's priorities and the 2024 presidential election.
Rising concerns over U.S. government spending and the budget deficit have led to a sell-off in Treasury bonds, pushing prices to 17-year lows as bond vigilantes punish profligate governments by selling their bonds.
The US bond market is experiencing its largest sell-off in history, with benchmark yields increasing by five times since the end of 2020, and BlackRock predicts that the climb will continue due to factors such as inflation, higher interest rates, and rising US debt.
A rise in bond yields and volatility, coupled with weak market breadth, suggests a potential market sell-off, as highlighted by the author's analysis.
The relentless selling of U.S. government bonds has caused Treasury yields to reach their highest level in over 15 years, impacting stocks, real estate, and the global financial system as a whole.
The surge in bond yields is causing losses for investment funds and banks, pushing up borrowing costs globally and impacting stock markets, while the dollar remains stagnant and currency traders predict a recession on the horizon.
The relentless selling of U.S. government bonds has driven Treasury yields to their highest level in over a decade, impacting stocks, real estate, and other markets.
The bond markets are going through a volatile period, with collapsing bond prices and rising yields, as investors dump US treasuries due to factors such as fears of conflict in the Middle East and concerns about President Joe Biden's high-spending approach, leading to higher interest rates and impacting mortgages and debt.
The sharp sell-off in the bond market, driven by factors such as stronger economic data and the government's growing debt levels, has significant implications for borrowing costs and the economy as a whole, with the yield on the 10-year Treasury note reaching its highest level since 2007.
Americans are already feeling the impact of higher bond yields, with mortgage rates topping 8%, personal loan rates at their highest level since 2007, credit card interest rates soaring, and delinquencies on credit cards and personal loans on the rise.
Bond markets are experiencing a decrease in pressure, providing relief to other markets as investors take a breather from the recent surge in rates, while equities rebounded despite a Wall Street selloff.
The bond market is experiencing a significant resurgence with soaring yields, raising concerns about the impact on the economy, inflation, consumer loan rates, and trade flows. The Federal Reserve is closely monitoring the bond market, as higher yields can help quell inflation, but also increase costs and limit business activity. The bond market plays a critical role in financing government debt, and its power and influence cannot be ignored.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/TLVAB4WM3NO3XCD5FMSBLSVHWM.jpg)