Macro: It’s all about elections and keeping status quo
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
Head of Fixed Income Strategy
As bond markets experience a widespread sell-off across various tenors, the US Treasury is gearing up to auction $13 billion worth of the infamous 20-year bonds (US912810TZ12) on Wednesday.
The 20-year maturity stands out due to its notorious illiquidity within the US yield curve. Reintroduced in May 2020 during the Covid pandemic to bolster the US Treasury's debt-raising efforts, it had been discontinued in 1986. This explains why it offers a substantial yield pick up over 30-year bonds, approximately 10 basis points higher.
Let's delve into the advantages and drawbacks of the upcoming 20-year US Treasury auction to ascertain whether weak bidding metrics might accelerate the uptick in yields.
US 20-year Treasury yields are currently trading around the 0.618 retracement at 4.88. The trend is bullish supported by RSI indicating 20-year yields are likely to move higher towards the 0.786 retracement and resistance area at around 5.05-5.20. To reverse this bullish trend a close below 4.42 is required. (Courtesy of Kim Cramer Larsson)
16-04 QT Tapering Looms Despite Macroeconomic Conditions: Fear of Liquidity Squeeze Drives Policy
08-Apr ECB preview: data-driven until June, Fed-dependent thereafter.
03-Apr Fixed income: Keep calm, seize the moment.
21-Mar FOMC bond takeaway: beware of ultra-long duration.
18-Mar Bank of England Preview: slight dovish shift in the MPC amid disinflationary trends.
18-Mar FOMC Preview: dot plot and quantitative tightening in focus.
12-Mar US Treasury auctions on the back of the US CPI might offer critical insights to investors.
07-Mar The Debt Management Office's Gilts Sales Matter More Than The Spring Budget.
05-Mar "Quantitative Tightening" or "Operation Twist" is coming up. What are the implications for bonds?
01-Mar The bond weekly wrap: slower than expected disinflation creates a floor for bond yields.
29-Feb ECB preview: European sovereign bond yields are likely to remain rangebound until the first rate cut.
27-Feb Defense bonds: risks and opportunities amid an uncertain geopolitical and macroeconomic environment.
23-Feb Two-year US Treasury notes offer an appealing entry point.
21-Feb Four reasons why the ECB keeps calm and cuts later.
14 Feb Higher CPI shows that rates volatility will remain elevated.
12 Feb Ultra-long sovereign issuance draws buy-the-dip demand but stakes are high.
06 Feb Technical Update - US 10-year Treasury yields resuming uptrend? US Treasury and Euro Bund futures testing key supports
05 Feb The upcoming 30-year US Treasury auction might rattle markets
30 Jan BOE preview: BoE hold unlikely to last as inflation plummets
29 Jan FOMC preview: the Fed might be on hold, but easing is inevitable.
26 Jan The ECB holds rates: is the bond rally sustainable?
18 Jan The most infamous bond trade: the Austria century bond.
16 Jan European sovereigns: inflation, stagnation and the bumpy road to rate cuts in 2024.
10 Jan US Treasuries: where do we go from here?
09 Jan Quarterly Outlook: bonds on everybody’s lips.