Het Wolfstreet report vandaag houdt zich bezig met de chaos op de Amerikaanse obligatiemarkten. Wat is daar gaande, en vooral: waarom?

The total focus on the Fed. And then the Fed steps away.

---

Duur: 11:58 min.

Publicatie 14 augustus

---

Volledige transcriptie van dit Wolfstreet report

So now, inflation has jumped by 6.0% according to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or by 5.4% according to the Consumer Price Index for All Urban Consumers. According to private sector measures, and my own estimates, inflation, when properly calculated, has jumped by a lot more.

And Americans are figuring this out because they’re seeing how the income from their labor buys less and less.

But the bond market, which is supposed to be the smart money, hasn’t figured this out yet. It too will eventually figure it out, as it did last time – that was in the late 1970s. And that’s going to be a little rough.

A year ago, the bond market put the yield on 10-year Treasury securities at around 0.6%. At the time, the narrative in the bond market was that interest rates would go negative, as they had already done in many countries in Europe.

But then, this narrative started sounding increasingly silly, as inflation began rising amid red-hot spending on goods by consumers. There was talk that the Fed would eventually taper its asset purchases, as the economy was growing in leaps and bounds. And by the end of March this year, the 10-year yield had nearly tripled, from 0.6% to 1.7%.

By definition, when bond yields rise, bond prices fall, and in bonds with long maturities, this six-month surge in yields caused some bloodletting. This was particularly felt by holders of mutual funds that specialize in government bonds with long maturities.

Since April, even as inflation became red-hot, the yield on 10-year Treasury securities dropped. By early August, it was at 1.15%, down nearly 60 basis points from the March high.

This drop in yield amid spiking inflation crushed the “real” yield, meaning the yield earned by investors minus the rate of CPI inflation.

-/-/-/-/-/-/-/-/-/-/-/-/-

Verder lezen van deze transscriptie kan – onder de link – op Wolfstreet.

---

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

Eerdere afleveringen van het Wolfstreet report vindt u hier.