The 30-year Treasury yield reached 5.198%, the highest level since before the Great Recession. A comparison to early-1990s “bond vigilantes” narratives is tempting, when investors pushed yields higher over fears about deficits. One strategist argues that coordinated vigilante behavior does not exist because the bond market is too large and dominated by non-discretionary buyers such as pension funds. A more automatic explanation is offered: momentum-driven funds buy as prices rise and sell as they fall, especially during thin trading periods when stocks are near record highs. Other observers point to recent Treasury auctions, including a 30-year sale around a 5% rate, as a factor that could have signaled the move.
"“But now I would like to come back as the bond market,” he said. “You can intimidate everybody.”"
"“I get that the sort of story, of a couple guys in a room saying inflation is going to go higher, we're going to fight back against the government, I get why that's like an ongoing narrative,” LeBas said. But that group-the so-called “bond vigilantes,” a phrase coined by economist Ed Yardeni-“doesn't exist,” according to LeBas."
"The reason why, he said, is that the bond market have become far too large and too dominated by non-discretionary buyers like pension funds for a handful of participants to engineer a message. The cleaner explanation, in his telling, is basically automatic: momentum-driven funds that buy when prices rise and sell when they fall, going into a thin week with the stock market near all time highs."
"Close bond watchers could have predicted this last week, when the Treasury auctioned off 30-year T-bills at a 5% interest rate; an amazing deal for investors, where you can loan the government money for 30 years and get approximately 5% back a year."
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]