US Dollar Slide Sparks Concerns Over Bond Demand | Bonds & Fixed Income

It was an pleasant day in stocks, however a more fascinating day in charges, with the , primarily based on my final verify, hovering by 20 bps to 4.2%. The 10-year fee has been positively correlated with the equity market for some time, and I’m wondering how long this optimistic correlation will final. Once rising charges are seen as a signal of bother, that correlation will break and invert.

The actual enjoyable most likely begins right now, when the stock-bond correlation might be put to the check with the Treasury public sale. You will need to pay probably the most consideration to the unfold between the high yield fee, the when-issued fee, and the oblique acceptance fee. If the HY fee is larger than the WI fee and the oblique acceptance is low, that might be a dangerous signal.

The true check is on Wednesday when the 10-year treasury public sale might be held, after which on Thursday, when the public sale might be held. Indirect acceptance will inform us whether or not international patrons have stopped shopping for US bonds.

More importantly, the 10-year fee has efficiently examined and bounced off the three.9% stage two occasions. The most sudden transfer could be for the 10-year to type an inverse head-and-shoulders now and proceed to maneuver larger.

Of course, all of this hinges on the , as a result of if it weakens additional, it will likely be a signal of the capital outflows. I’m not sure, however the sample on the doesn’t look full at this level, that means I believe it might probably nonetheless fall additional, back to round 100.

To be continued…

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