Latest news with #bondyield
Globe and Mail
2 days ago
- Business
- Globe and Mail
US 30-Year Bond (TLT) Yields Drop Sharply Amid Global Debt Market Rally
Long-term Treasury investors breathed a sigh of relief on Tuesday, as a broad global debt rally significantly eased yields, delivering the largest single-day drop in the U.S. 30-year bond (TLT) yield since March. Market participants re-entered longer maturities amid renewed optimism sparked by Japanese authorities considering adjustments to debt issuance, aiming to stabilize their own bond markets after weeks of turmoil. Despite persistent concerns over the U.S. fiscal outlook and recent tariff escalations by President Trump, the solid auction of $69 billion in two-year Treasuries provided additional support, highlighting investor demand at the shorter end of the yield curve. The 30-year U.S. yield dropped notably back under the psychologically important 5% level, tempering anxieties surrounding rising government borrowing costs. Market Overview: U.S. 30-year bond yield sees sharpest daily decline since late March. Japanese bond market stabilization efforts boost global bond sentiment. Robust demand for two-year U.S. Treasuries supports broader bond rally. Key Points: Yield retreat occurs despite ongoing U.S. fiscal uncertainty and tariffs. Japan's possible debt issuance adjustment provides critical market relief. U.S. Treasury term premiums remain elevated, indicating ongoing caution. Looking Ahead: Upcoming U.S. bond auctions and Federal Reserve minutes closely watched. Persistent fiscal concerns suggest relief rally could be temporary. Long-term yields likely to remain volatile amid global fiscal pressures. Bull Case: A significant global debt rally led to the largest single-day drop in the U.S. 30-year bond yield since March, with the yield falling back below the key 5% level, providing temporary relief to long-term Treasury investors. Renewed optimism was sparked by considerations from Japanese authorities to adjust their debt issuance to stabilize their own turbulent bond markets, which positively influenced global bond sentiment and U.S. Treasuries. A solid auction of $69 billion in two-year U.S. Treasuries demonstrated investor demand at the shorter end of the yield curve, contributing to the broader bond market rally. The return of yield-hungry buyers, capitalizing on higher yields, has temporarily stabilized market sentiment despite underlying fiscal concerns. Bear Case: Experts warn that the current relief rally in bond markets might be short-lived due to persistent and unresolved concerns over ballooning U.S. fiscal deficits and the nation's overall fiscal trajectory. Moody's recent downgrade of U.S. sovereign debt continues to underscore investor anxiety about the sustainability of U.S. government borrowing. U.S. Treasury term premiums remain elevated, indicating that investors still demand significant compensation for holding long-term U.S. debt due to ongoing caution and perceived risk. Upcoming auctions of intermediate U.S. debt and forthcoming economic data releases could quickly reverse the positive sentiment and reintroduce volatility. Structural concerns about the U.S. fiscal outlook and global fiscal pressures suggest that long-term U.S. borrowing costs are likely to remain volatile and potentially elevated. However, experts warn this relief might be short-lived. Underlying concerns over ballooning U.S. deficits—recently underscored by Moody's downgrade—and persistent investor anxiety about Washington's fiscal trajectory suggest caution is still warranted. Additionally, upcoming auctions of intermediate U.S. debt and forthcoming economic data could quickly shift sentiment again. As markets navigate these turbulent fiscal waters, the return of yield-hungry buyers temporarily stabilizes sentiment. Yet, with structural concerns unresolved, bond investors face continued uncertainty, reinforcing the delicate balance underpinning current market dynamics.
Zawya
2 days ago
- Business
- Zawya
Euro zone bond yields rise; eyes on US trade uncertainty, ECB and data
Germany's 10-year government bond yield rose on Monday after a big fall last week, while shorter-dated yields were mostly steady as traders braced for a widely expected European Central Bank rate cut later this week. Germany's 10-year yield, the benchmark for the euro zone, was last up 3.5 basis points at 2.54%, after its biggest weekly fall since mid-April last week. Bond yields move inversely to prices. "It is a little bit of a counter reaction to the rally at the end of last week," said Anders Svendsen, chief analyst at Nordea. Markets were largely unmoved by data that showed the downturn in euro zone manufacturing eased further last month. The HCOB Eurozone Manufacturing Purchasing Managers' Index rose to 49.4 in May from 49.0 in April. That was a 33-month high and in line with a preliminary estimate, but below the 50.0 threshold separating growth from contraction. Attention remains on U.S. trade policy, after President Donald Trump on Friday said he planned to increase tariffs on imported steel and aluminium to 50% from 25%, deepening his trade war. "Doubling import taxes on steel and aluminium, and aggravating China once again, mean we face a situation where uncertainty prevails," said AJ Bell investment director Russ Mould. ECB SET FOR RATE CUT The European Central Bank is tipped to cut its key rate to 2% on Thursday, its eighth move this cycle. Investors reckon a pause will then follow as the economy is holding up better than anticipated and longer-term inflation worries creep back. Money market traders are almost fully pricing in a quarter-point move on Thursday, while about 55 basis points of easing is priced by the end of the year, implying only one more quarter point move. "They (the ECB) have had all the opportunities in the world to push back against market pricing and haven't done that," Nordea's Svendsen said. "The interesting thing will be around the new staff projections because they will factor in the fiscal package from Germany and the trade war," he added. "It will probably push up their core inflation forecast a little bit." Germany's two-year yield, which is more sensitive to changes in interest rate policy and expectations, was little changed at 1.79%, within its recent tight range. Traders were also cautious around a 10-year Japanese auction taking place on Tuesday, which comes following weak demand for long-dated auctions in May. Yields of government bonds across the globe with the longest maturities have risen in recent weeks, although moves in Germany have been more subdued despite Germany's spending commitments. Germany's 30-year yield was last up 4 bps at 3.05%, but remains well below its year-to-date high of 3.25% from mid-March. Italy's 10-year yield, the benchmark for the euro zone periphery, was up 4.5 bps to 3.54%, pushing the closely-watched gap between Italian and German 10-year bond yields slightly wider to 97 bps. (Reporting by Samuel Indyk and Yoruk Bahceli. Editing by Bernadette Baum and Mark Potter)
Zawya
6 days ago
- Business
- Zawya
Japan's 2-year bond rises after strong auction
TOKYO - Japan's two-year government bond prices rose on Friday, after an auction for the bonds with the same tenor witnessed a strong outcome. The two-year JGB yield slipped 1 basis point (bp) to 0.74%. Bond yields move inversely to prices. The auction received bids worth 3.77 times the amount sold, its best ratio since January, and was higher than a ratio of 3.58 times at the previous auction. "The outcome showed that the market welcomed the current level yield of the two-year bonds," said Keisuke Tsuruta, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. "Demand was strong as bets for the Bank of Japan's interest rate increase remained weak," he added. The two-year bond auction came as the market expects a possible cut in the sale of bonds with super-long maturities in the coming months, which could boost the issuance of shorter-dated bonds, such as two-year notes. Last week, the yield on the 30- and 40-year JGBs hit record highs amid fiscal deficit concerns. The yields plunged on Tuesday after Reuters reported that the finance ministry was considering reducing its sales of super-long bonds. Investors are cautiously awaiting the finance ministry's auction for 30-year JGBs on Thursday next week. "The markets for the two-year bonds and the bonds with super-long maturities are different," said Tsuruta. The five-year yield fell 2 bps to 1.01%. The 10-year JGB yield fell 1 bp to 1.505% and the 20-year JGB yield fell 3.5 bps to 2.415%. The 30- and 40-year JGBs were not traded as of 0420 GMT. (Reporting by Junko Fujita and Rocky Swift; Editing by Rashmi Aich)
Bloomberg
23-05-2025
- Business
- Bloomberg
India-US Yield Gap at 20-Year Low Spurs Concern of Fund Outflows
Follow Bloomberg India on WhatsApp for exclusive content and analysis on what billionaires, businesses and markets are doing. Sign up here. India's bond yield premium over the US has narrowed to its smallest in two decades, likely risking fund outflows from local debt.
Bloomberg
08-05-2025
- Business
- Bloomberg
Shorter India Bonds Rally as Five-Year Yield Falls Below 6%
India's five-year bond yield slipped below 6% for the first time since 2022 amid ample liquidity and expectations of more near-term interest rate cuts. The yield dropped four basis points to 5.997%, while the benchmark 10-year yield was edged down two basis points, reinforcing the ongoing bull-steepening trend characterized by shorter yields falling more sharply than longer ones.
