Latest news with #Treasurybonds
Reuters
12-08-2025
- Business
- Reuters
Wall St poised for higher open after July inflation data
Aug 12 (Reuters) - Wall Street's main indexes were gearing up for a higher open on Tuesday, after data showed inflation rose broadly in line with expectations in July, putting the Federal Reserve on track to lower interest rates in September. A Labor Department report showed that the Consumer Price Index (CPI) rose by an expected 0.2% on a monthly basis in July, while on an annual basis it increased 2.7% - a touch lower than the 2.8% economists were projecting. However limiting the optimism, the report also suggested that underlying inflation rose by a more-than-expected 3.1% in the previous month as markets gauge the impact tariffs and trade uncertainty have had on the economy. Yields on shorter-dated Treasury bonds - a reflection of interest rate expectations - moved lower after the data and interest rate futures showed traders continue to expect the Fed could lower interest rates by about 25 basis points in September with a 88.8% chance. "The core message in core inflation is that any tariff-induced inflation is likely to be a process, not an event. Eventually, tariffs can show up in varying degrees in consumer prices, but these one-off price increases don't happen all at once," said Brian Jacobsen, chief economist at Annex Wealth Management. "As long as breakeven inflation rates and other market based measures of inflation expectations stay contained, the Fed should feel comfortable enough to recommence cutting in September." The data also comes at a time when there are growing concerns over the quality of economic data, weeks after President Donald Trump fired the head of the Bureau of Labor Statistics following downward revisions to previous months' nonfarm payrolls counts. At 08:49 a.m. ET, Dow E-minis were up 268 points, or 0.61%, S&P 500 E-minis were up 39.25 points, or 0.61% and Nasdaq 100 E-minis were up 165 points, or 0.70%. Futures tracking the domestically exposed small cap Russell 2000 index (.RTYcv1), opens new tab jumped 1.3%. Further providing some relief for investors globally, U.S. and China extended their tariff truce until November 10, staving off triple-digit duties on each other's goods. U.S. stocks that have touched record highs, boosted by better-than-expected earnings from technology majors, a detente between the U.S. and its top trade partners and on expectations of rate cuts. Markets are monitoring developments around Trump's nominee E.J. Antoni to the Bureau of Labor Statistics commissioner post and potential candidates for the Fed's top job. Among single stocks, Intel (INTC.O), opens new tab rose 3.5% in premarket trading as Trump praised CEO Lip-Bu Tan following their meeting on Monday, days after seeking Tan's resignation. Palo Alto Networks (PANW.O), opens new tab gained 1.8% after brokerage Piper Sandler raised its rating on the cybersecurity stock to "overweight" from "neutral". Shares of Circle Internet (CRCL.N), opens new tab rose 11.5% after the stablecoin firm posted its second-quarter results, while Venture Global gained 5.7% as the LNG producer reported second-quarter revenue above estimates. Hanesbrands (HBI.N), opens new tab soared 37% after a report said Canada's Gildan Activewear ( opens new tab is nearing a deal to acquire the U.S. innerwear maker for about $5 billion, including debt. U.S.-listed shares of On Holding climbed 15.9% after the sportswear maker raised its annual sales forecast.
Bloomberg
30-06-2025
- Business
- Bloomberg
BlackRock's Rieder Would Rather Buy Stocks Than Long-Dated Debt
BlackRock Inc.'s Rick Rieder sees more opportunity in the stock market at the moment than at the long-end of the Treasury curve. Shorter-dated debt is attractive from an income perspective, said Rieder, CIO of global fixed income for the world's biggest asset manager. But he said long-duration bonds are growing increasingly correlated to equity-market moves and no longer act as a hedge.
Washington Post
27-06-2025
- Business
- Washington Post
Exploding U.S. indebtedness makes a fiscal crisis almost inevitable
Jamie Dimon, the CEO of JPMorgan Chase, was more tantalizing than illuminating when he recently said, regarding the nation's fiscal trajectory, 'You are going to see a crack in the bond market.' Details, even if hypotheticals, would be helpful concerning the market where U.S. debt is sold. Twenty-five percent of Treasury bonds, about $9 trillion worth, are held by foreigners, who surely have noticed a provision in the One Big Beautiful Bill (1,018 pages). Unless and until it is eliminated, the provision empowers presidents to impose a 20 percent tax on interest payments to foreigners. The potential applicability of this to particular countries and kinds of income is unclear. It could be merely America First flag-waving. But foreign bond purchasers, watching the U.S. government scrounge for money as it cuts taxes and swells the national debt in trillion-dollar tranches, surely think: What the provision makes possible is possible. Such a significant devaluation of foreign-purchased Treasury bonds would powerfully prod foreign investors to diversify away from Treasurys, which would raise the cost of U.S. borrowing an unpredictable amount. Concerning which, Kenneth Rogoff is alarmingly plausible. Before he became an intergalactically famous Harvard economics professor, and a peripatetic participant in global financial affairs, he was a professional chess player. Hence his penchant for thinking many moves ahead. 'I have observed that, although the financial system evolves glacially,' he writes in his new book 'Our Dollar, Your Problem,' 'the occasional dramatic turn is to be expected.' What is expected is considered probable. The nation's exploding indebtedness could presage a 'dramatic turn.' 'The amount of marketable U.S. government debt,' Rogoff says, roughly equals 'that of all other advanced countries combined; a similar comparison would hold for corporate debt.' Furthermore, when in 2023 Silicon Valley Bank and some other small and medium-size banks became actuarially bankrupt because of rising interest rates, the Federal Reserve created a facility that implicitly backstopped potential capital losses of all banks, estimated to be more than $2 trillion. The facility has gone away, but the mentality that created it remains. Therefore, so does another potential large increase in government debt. 'The U.S. government has continually increased the size and scope of its implicit bailout guarantees,' Rogoff writes, 'creating what might be termed 'the financial welfare state.'' Those of the 'lower forever' school of thought regarding interest rates are serene about the challenge of servicing the national debt. Rogoff, however, notes that when Ben Bernanke left as Federal Reserve chair in 2014, Bernanke, then 60, 'reportedly began telling private audiences that he did not expect to see 4 percent short-term interest rates again in his lifetime.' Eight years later, such rates reached 5.5 percent, and long-term rates have risen significantly. Rogoff thinks today's higher rates are likely the new normal, resembling the old normal, for many reasons, including 'the massive rise in global debt (public and private).' And 'if the worldwide rise in populism leads to greater income redistribution, that too will increase aggregate demand, since low-income individuals spend a higher share of their earnings.' This would be an inflation risk. Rogoff warns that many believers in 'lower forever' interest rates express the human propensity to believe in a 'supercheap' way to expand 'the footprint of government.' The nation is, however, 'running deficits at such a prolific rate that it is likely headed for trouble.' He rejects 'lazy language' about U.S. government debt obligations being 'safe.' Debt is a temptation for inflation, which is slow-motion repudiation of debt compiled in dollars that are losing their value. (Ninety percent of U.S. debt is not indexed for inflation.) When President Franklin D. Roosevelt abrogated the gold standard backing the currency, the Supreme Court ruled it a default. Also, holders of U.S. bonds were not safe from significant losses during this decade's post-pandemic inflation, or from huge losses during the 1970 inflation. Investors watching U.S. fiscal fecklessness might increasingly demand debt indexed to inflation. 'How sure are we,' Rogoff wonders, 'that no future president would seek a way to effectively abrogate the inflation link out of frustration' that it impeded 'partial default through inflation.' A president could call this putting America first. Projecting the exact arrival of an economic crisis is, Rogoff writes, 'extremely difficult,' an uncertainty shared with medicine. Physicians can identify factors that increase risks of heart attack in patients who nevertheless escape them. And low-risk patients can suffer attacks after being deemed fit as fiddles. Still, today reasonable fiscal physicians discern not just a risk but a high probability of a debt and/or inflation crisis.
Reuters
18-06-2025
- Business
- Reuters
Regulators' plans for US bank leverage relief may underwhelm US Treasury market
NEW YORK, June 18 (Reuters) - U.S. Treasury market participants hoping for a long-awaited shift in bank leverage rules may be in for a letdown if U.S. regulators choose to ease capital requirements rather than exclude U.S. government bonds from leverage calculations. The Federal Reserve said this week it would weigh proposals to ease leverage requirements for large banks at a June 25 meeting, launching what's likely to be a wider review of banking regulations. The agenda includes potential changes to the "supplementary leverage ratio," a rule that mandates banks hold capital against all assets, irrespective of risk. Regulators including the Fed, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency have been considering whether to tweak the rule's formula to reduce big banks' burdens or provide relief for extremely safe investments, like Treasury bonds, Reuters has reported. Currently, all banks are required to hold 3% of their capital against their leverage exposure, which is their assets and other off-balance sheet items like derivatives. The largest global banks must hold an extra 2% as well in what is known as the "enhanced supplementary leverage ratio." The Fed is expected to propose tweaks to that ratio in a bid to reduce the overall burden of that requirement, as opposed to broadly exempting categories of assets from the requirement, such as Treasury bonds, according to two industry officials. However, it is possible the Fed could seek input on some exemptions, the officials said. The FDIC announced its own meeting next Thursday, where the agency will also discuss proposed changes to that ratio. On Tuesday, Bloomberg reported that regulators plan to reduce by up to 1.5 percentage points the enhanced ratio for the biggest banks, bringing it down to a range of 3.5% to 4.5%. "Lowering the capital requirements instead of a Treasury carve-out from the SLR is a weaker form of regulatory easing, and in my view it doesn't fully address the constraint dealers face during intense market stress," said Steven Zeng, U.S. rates strategist at Deutsche Bank. "In our view, the news is moderately underwhelming," analysts at Wells Fargo said in a note. "We think that many market participants were anticipating a carve out of UST assets from the denominator." The Fed did not immediately respond to a request for comment. Spreads between long-term swap rates and Treasury yields tightened on Wednesday, turning more negative, even as earlier in the year they had been widening amid hopes that regulatory shifts in bank capital rules would bolster demand for Treasuries. The move likely reflected disappointment on the news that regulators plan to lower the requirements, said Zeng. "I still think a full carve-out is the most effective way to bolster market liquidity and compress the spread between Treasuries and swaps, but understandably it's also a significant jump for Fed regulators," he said. The 10-year swap spreads were last at minus 54 basis points from minus 53 on Tuesday, while 30-year swap spreads were last at minus 88 bps from minus 86.5 bps on Tuesday. Banks have argued for years that the SLR, established after the 2007-2009 financial crisis, should be reformed. They say it was meant to serve as a baseline, requiring banks to hold capital against even very safe assets, but has grown over time to become a constraint on bank lending. U.S. Treasury Secretary Scott Bessent has said in a Bloomberg interview last month that a shift in the ratio could bring Treasury yields down significantly. Treasury market participants have come to see it as a major obstacle to banks providing liquidity to traders, particularly at times of heightened volatility, but there are doubts over whether an easing of the requirement will boost Treasury prices. "We're skeptical that lowering SLR will trigger a massive round of buying in U.S. Treasuries from major U.S. banks," BMO Capital Markets analysts said in a note on Wednesday.
Bloomberg
09-06-2025
- Business
- Bloomberg
Bond Auctions Are Turning Into Wall Street's Most-Watched Events
Bond auctions are shaping up to be the most-anticipated events on Wall Street. With yields on long-term debt soaring in recent weeks, investors are paying closer attention to the routine auctions as an instant readout of market demand. The big date on the calendar this week is a Treasury sale of $22 billion of 30-year government bonds on Thursday.
