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Traders got another taste this week of the contrasting forces battering the market with bonds falling after a surprise cut to global oil production, only to bounce back hours later following weak economic data.
The disparity comes as fixed-income traders allocate money into safer credits, such as investment-grade or US government debt, amid concerns that borrowers in the lowest-rated rung of corporate debt are even more at risk of defaulting than usual.
Government bonds surged and stocks slid as signs of distress at a California lender spurred broader worries over the US banking sector's debt holdings.
Traders in the hyper-liquid world of ETFs ditched equities and corporate bonds and headed for the safety of government debt as yields broke out anew.
Companies issued more than $18 billion of US dollar-denominated bonds this past week at an average concession of -1 basis point, on the back of orders that were five times the offering size.
Wednesday afternoon was full of drama as traders first took hope from the central bank's statement but then slumped following stern comments by Chair Jerome Powell.
A shift toward private markets is cushioning many of the world's largest investors from the wreckage wrought by runaway inflation and spiraling interest rates.
The central bank is still pretending that its policies won't hurt much. That's not a good sign.
How to play the market while yields are still rising, how high rates might go before they plateau or fall, and whether bonds will witness increases across the whole curve are all key questions.
Investors aren't necessarily the ones getting cold feet despite interest-rate uncertainty and economists' growing warnings of a potential recession.
The world’s largest asset manager retains its long-term bullish view on equities, but has gone underweight developed-market stocks in the near term as the risk of stalling growth rises.
A closely-watched part of the U.S. yield curve inverted as Treasury futures volumes leaped on increasing concern that tighter policy will take a toll on growth.
The exchange market features some kind of assets such as enterprise asset-backed securities which aren’t traded on the interbank market.
Critics say that the central bank is moving in the right direction, but a 50 basis point interest rate hike was too restrained and a 75 bps move would have made better sense.
Stocks advanced after President Joe Biden signaled he’d reconsider China tariffs imposed by the Trump administration. The dollar and Treasuries retreated.
Yet prophecies of imminent stagflation are drowning out a countervailing consensus among savvy economists, who see the US growing through 2024 as inflation subsides to a third of its current 8.3% rate.
Treasuries gained for a second day as investors sought out the safest debt, driving the 10-year yield down 11 basis points to 2.77%, it’s lowest level since late April.
The move, if confirmed, may be the final straw in Russia’s debt saga after almost three months of war in Ukraine, pushing the country into its first foreign default in a century.
But in pouring cold water on the prospect for a jumbo-sized 75 basis point rate hike next month, he may have inadvertently set the stage for more turbulence going forward if inflationary pressures increase.
Jitters are everywhere after equities and bonds had their worst concerted monthly selloff since the global financial crisis while the dollar surged to a 20-year high.
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