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Of the 22 sales analyzed, all of 30-year bonds, subsequent moves in stocks were bigger than for monthly payrolls data – which traders typically sweat over to assess the health of the economy and Federal Reserve policy.
The Wall Street bank recently shifted its bond recommendation to neutral from underweight — for the first time since June 2020 — though has so far stopped short of an overweight call.
On Nov. 7, voters will consider a whopping $2.8 billion bond package, including $94 million for a new 8,000-seat venue that could be the costliest in Texas history.
At HSBC Holdings Plc, Steve Major says he was "wrong" to assume the U.S. government's growing supply of bonds didn't matter, and Morgan Stanley finally joined Bank of America and moved to a neutral position on Treasuries.
While the selloff abated on Wednesday, traders are on high alert for a resurgence in volatility — especially if U.S. non-farm payrolls data on Friday come in stronger than expected.
After the salvo of central bank decisions last week, traders are increasingly concerned that rising oil prices risk fanning inflation, which will make it difficult for policymakers to reduce rates anytime soon.
Bond traders are bracing for Treasury yields to keep pushing higher after the Fed signaled it's likely to hold interest rates at lofty levels well into next year.
Yields on longer-dated debt are so high that even if the Fed continues hiking for longer investors still feel they'll be compensated.
Optimism may be building that the Fed is poised to steer the economy toward a soft landing, but Treasury market has delivered what is widely understood as a starkly different message: The economy is veering toward a contraction.
Regional and consumer lenders subject to increased oversight will probably issue at least $15 billion of bonds over the remainder of the year and $44 billion maturing from this group through the end of 2024.
Among the winners: Hedge funds betting that bond yields will rise anew. It's clear that Jackson Hole's hawkish message has been received loud and clear.
Some are pondering the implications of whether there has been an increase in the neutral rate, also known as R*, the theoretical level at which rates neither stimulate nor restrict an economy.
The key to the trade is that the instruments, worth about $20 billion in all, are pegged to the now-defunct London interbank offered rate, or Libor.
Traders also weighed a US government report saying that job growth in the year through March will probably be revised down by 306,000 — a smaller adjustment than some economists expected.
The strategy of loading up on government bonds this year in a bold bet that would atone for the punishing losses suffered in 2022 is misfiring once again.
The sale marks the firm's first operating company-level debt sale in about four years.
Much of the bullish case for emerging markets this year was predicated on a growth recovery led by China, which successive data releases have shown to be patchy at best and a non-starter at worst.
Rich-world peers from Italy to France and the UK are in the spotlight as higher interest rates impact debt levels exceeding 100% of annual output. Stakes are even higher for capital-hungry developing nations.
The yield on 30-year securities has climbed almost 25 basis points over the past three sessions, returning it to levels last seen in mid-November when inflation was still above 7%, more than double the current rate.
The bump in issuance showcases the rising borrowing needs that contributed to Tuesday's decision by Fitch Ratings to lower the sovereign U.S. credit rating by one level, to AA+.
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