{"id":1746430,"date":"2022-11-21T06:06:09","date_gmt":"2022-11-21T11:06:09","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1746430"},"modified":"2022-11-21T08:18:04","modified_gmt":"2022-11-21T13:18:04","slug":"bond-market-heads-into-treacherous-waters","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bond-market-heads-into-treacherous-waters\/","title":{"rendered":"Bond Market Heads Into Treacherous Waters"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">12<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbond-market-heads-into-treacherous-waters%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1746430&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/b855c4a7eb505efdc474d58d0acc3472\" class=\"ff-og-image-inserted\" alt=\"image\" \/><\/div>\n<p>(Bloomberg) &#8212; As the bond market limps toward 2023, it faces the prospect of a final bout of chaos, exacerbated by dwindling trading volume typical during the last weeks of the year.<\/p>\n<p>Most Read from Bloomberg<\/p>\n<p>The most punishing time period on record for investors in US government bonds has also been one of the most volatile, with frequent large daily changes in yield. Mostly, those were about pricing in Federal Reserve rate increases aimed at squelching inflation. Developments this week made clear that the turbulence may endure a while longer.<\/p>\n<p>The benchmark 10-year note\u2019s yield\u2019s daily range exceeded 12 basis points three times. One case involved comments by St. Louis Fed President James Bullard on Thursday suggesting a higher eventual peak for the policy rate than the current consensus of about 5%.<\/p>\n<p>It wasn\u2019t unusual. There have been yield swings exceeding 10 basis points on 51 days so far this year, Beth Hammack, co-head of Goldman Sachs Group Inc.\u2019s global financing group and an adviser to the Treasury Department, said on a panel at the New York Fed\u2019s annual Treasury market structure conference this week.<\/p>\n<p>That\u2019s too many, Hammack said, even if such changes were arguably too rare during the previous 10 years, when the Fed was providing extraordinary accommodation.<\/p>\n<p>\u201cThe Treasury market is still particularly volatile right now and liquidity feels thin,\u201d she said. A gauge of the market\u2019s volatility based on options prices, the ICE BofA MOVE Index, resumed its advance this week after a month-long retreat from the highest levels since the onset of the pandemic in March 2020.<\/p>\n<p>Trading volume has increased this year, exceeding $600 billion per day on average in recent months, Nellie Liang, the Treasury Department\u2019s top domestic finance official, said at the same event. But it\u2019s been boosted by investors shedding old-vintage Treasuries, though to a lesser extent than during the market breakdown in March 2020.<\/p>\n<p>To investors like Matt Smith, investment director at London-based Ruffer LLP and a recent buyer of 30-year bonds, Treasuries remain a short-term trade despite the highest yields of the past decade. The rally that Bullard\u2019s comments halted is \u201ca counter trend move in rates and I don\u2019t expect that will last too long,\u201d he said.<\/p>\n<p>Potential flash points between now and year-end are mostly in the next four weeks, when employment and inflation data for November set the tone for the Fed\u2019s Dec. 14 policy decision. The minutes of its last meeting are set to be released on Wednesday.<\/p>\n<p>Bullard\u2019s Nov. 17 suggestion that 5% to 5.25% is the lowest level the Fed\u2019s policy rate should eventually reach drove the bond market to various new extremes this week, even as yields remained below their year-to-date highs. His comments came the day after stronger-than-estimated October retail sales data cast doubt on the effectiveness of the central bank\u2019s six rate increases since March.<\/p>\n<p>The two-year note\u2019s yield, a proxy for near-term expectations for the Fed\u2019s rate, climbed, exceeding the 5- and 10-year yields by the most in a generation. Meanwhile the 10-year dipped below the central bank\u2019s target range, currently 3.75%-4%, for the first time in the cycle, another sign that investors foresee economic damage that will necessitate rate cuts.<\/p>\n<p>\u201cThis is a market that wants to trade the future outcome today\u201d in spite of sub-optimal conditions, said George Goncalves, head of US macro strategy at MUFG. \u201cPutting new money to work at this time of the year doesn\u2019t make sense.\u201d<\/p>\n<p>What to Watch<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Economic calendar<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Nov. 21: Chicago Fed national activity index<\/p>\n<\/li>\n<li>\n<p>Nov. 22: Richmond Fed manufacturing index<\/p>\n<\/li>\n<li>\n<p>Nov. 23: MBA mortgage applications; durable goods orders; jobless claims; S&#038;P Global manufacturing and services PMIs; University of Michigan sentiment revisions; new home sales<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<li>\n<p>Fed calendar:<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Nov. 22: Cleveland Fed President Loretta Mester; Kansas City Fed President Esther George; St. Louis Fed President James Bullard<\/p>\n<\/li>\n<li>\n<p>Nov. 23: FOMC Nov. 1-2 meeting minutes<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<li>\n<p>Auction calendar:<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Nov. 21: 13- and 26-week bills; 2- and 5-year notes<\/p>\n<\/li>\n<li>\n<p>Nov. 22: 2-year floating rate notes; 7-year notes<\/p>\n<\/li>\n<li>\n<p>Nov. 23: 4-, 8- and 17-week bills<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Most Read from Bloomberg Businessweek<\/p>\n<p>\u00a92022 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) &#8212; As the bond market limps toward 2023, it faces the prospect of a final bout of chaos, exacerbated by dwindling trading volume typical during the last weeks of<\/p>\n","protected":false},"author":1,"featured_media":1746433,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1746430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1746430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1746430"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1746430\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1746433"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1746430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1746430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1746430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}