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The revenues of the US Treasury continued to circulate early on Wednesday, as one of the most severe sales extends since the global epidemic, as investors are increasingly interested in that the identification maneuvering of President Donald Trump will lead to the risk of inflation and the economy more than stagnation.
President Trump’s overwhelming commercial fees, including a 104 % cruise of Chinese goods, entered early today, as China has returned to its introductory revenge by 84 %, which led to a sharp decrease in global stocks and pushed the US dollar to the lowest levels since last September.
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However, the movements were most disturbing overnight, which also acquired the markets throughout the past week, in the bond market, where the revenue of standard treasury bonds continues to rise higher, even in the face of the risks of high stagnation.
Treasury bond returns move in the opposite direction of prices, and they usually decrease when investors sees slowdown in the future as investors benefit from safe armed assets.
However, the bonds are very sensitive to inflation risk, as the current value of future voucher payments and merits, making them less attractive when price pressures accelerate.
Nowadays, the markets are not sure about how the new tariff system affects both the US economies and the world, at least in terms of inflation, but it is in a large locking step in terms of expectations of weaker growth in the short term.
In theory, the demand for treasury bonds and the transfer of interest rates in the market must decrease, and a major goal of the Economic policy of the Trump administration and its repetition of both the President and Treasury Secretary, Scott Payette.
Prices do not decrease
However, what happened in practice is completely different: despite the sale of 9 trillion dollars in American stocks since the beginning of the year, the 10 -year US Treasury revenues have decreased only by 20 basis points.
This was not sufficient to reduce mortgage rates, or to reduce credit financing rates, which are two main conditions necessary to push morale in a consumer energy -powered economy.
Meanwhile, the movements of the modern market add a third dimension to the cabinet market, which can be more harmful.
Related: 10 -year bond auction will provide a major test for the Trump tariff strategy
“The most anxious narration recently is the idea of what we call” Sell American Inc. “The risk” said, “it is now dominating the issue of the increasing dysfunction that could usually pay returns.”
This may be the reason why investors are watching a remarkable rise in the Move index, the Merrill Lynch options appreciate my appreciation as a scale of fluctuations in the bond market.
The Move Move index has increased by more than 33 % over the past five days and is now trading at the highest levels in more than a year.
Standard notes revenues were traded for 10 years by 4.394 %, after touched 4.5 % in the overnight dealing, with two -year notes that were linked by 4.789 %.
Meanwhile, I tested 30 % of 5 % in dealing overnight, and the last changing hands were 4.866 %.
The risk of hedge boxes to the locker market
Analysts also notice that the relaxation of the so -called trading, as hedge boxes are betting on large sums on the simple difference between the future contracts for treasury bonds and the prices of cash treasury.
These positions, which are often filled with high, have increased in size over the past few years with the US deficit and debt levels, which adds another dimension to market risks in general.
Jarfi said: “If we have to slip into the recession, there is a path there to return to the decline, but here and now it draws the cabinet as a polluted product, and this is not a comfortable land.”
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He added: “The Trump administration, which defended the previous fall in the treasury revenues as something that clings to it as a positive compensation for the narration of the tariff that was hurting the origins of the risk.”
Charles Younes, CIO, at Fundinfo -based Fendinfo, is witnessing a change in perspective as it comes to watching US Treasury bonds, which he said “has long been seen as a global safe havens but are now reshape with feelings of feelings.”
10 years auction in focus
“This is not related to the basics, which are still widely sound, but about the high uncertainty and decrease in vision,” he said. “Investors are increasingly calling for the US -based assets.”
This can put a 39 billion dollar auction of the 10 -year notes, the first three sales of the Treasury, which is expected to collect about $ 119 billion in sharp focus.
Related: The job report in March provides relief, but the markets are preparing for weakness
The sale of $ 58 billion of notes for 3 years yesterday sparked a strong interest from the so -called indirect bids, which mostly consist of foreign central banks, but only after some price concessions at the last minute to make the paper more attractive.
“There will be nervousness in Wednesday’s auction for 10 years, especially since this is the standard line,” said Jarfi. “The topic here is worrying for a cabinet.”
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