Röd öppning 4 oktober
Bond Selloff Threatens Hopes for Economy’s Soft Landing
Growth prospects and concern over government debt are driving long-term interest rates higher
The yields on the 10-year Treasury note rose 0.119 percentage point Tuesday to 4.801%, the highest level since the subprime mortgage crisis began in August 2007.
On Wall Street, the Dow Industrials fell about 431 points, or 1.3%, giving up all their gains for the year.
The S&P 500 declined 1.4%. The technology-heavy Nasdaq Composite dropped 1.9%.
The lack of an obvious culprit for the latest rise in longer-dated yields suggests that the so-called term premium, or the extra yield that investors demand for investing in longer-dated assets, is rising.
That would mark an abrupt reversal following the low-inflation, low-growth environment that prevailed between the 2008-09 financial crisis and the Covid-19 pandemic.
Nick Timiraos Wall Street Journal 4 October 2023
Tumult across major bond markets
A relentless selloff in US government bonds is sparking tumult across major bond markets, as traders come to grips with the realization that interest rates are likely to remain higher for longer.
The average price for bonds in the Bloomberg US Treasury Index has tumbled to 85.5 cents on the dollar, half a cent above the record low in 1981.
Current yield levels will “suck capital away from the more risky asset classes as investors do not need to move along the risk spectrum to generate attractive returns,” Wilson from Jamieson Coote said.
Bloomberg 4 October 2023
Note that the rising long rates are by the market, not by the Fed
OBS att de stigande räntorna är långa räntor, bestämda av marknaden, inte av Fed
Englund blogg 4 oktober 2023
No One Wants to Remember 1987
So it’s disconcerting to find three references to that inauspicious year in my John Authers email inbox.
One is from Albert Edwards, the long-time very bearish investment strategist of SocGen.
Bank shares have come under more selling pressure
Higher yields on newly issued Treasury bonds erode the value of portfolios that include lower coupon debt issued when rates were lower.
Banks also tend to hold large exposure to commercial property loans that could be difficult to refinance if rates stay higher for longer.
MarketWatch 3 October 2023
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