All articles tagged with #treasury bonds
As US debt surpasses $38 trillion, the shift from foreign government holders to profit-driven private investors and hedge funds increases market volatility and financial fragility, with experts warning that relying on financial engineering and false hopes won't sustain the economy without credible deficit control plans.
The US debt has surged to $38 trillion, with a significant shift from foreign governments to private investors and hedge funds, raising concerns about market stability and the potential for increased volatility, as experts warn that the era of easy borrowing is over and call for credible fiscal reforms.
The Federal Reserve plans to end its quantitative tightening program on December 1, which will stop draining liquidity from the financial system and may support higher stock prices and lower long-term Treasury yields, potentially acting as an effective interest rate cut and boosting financial markets.
DoubleLine Capital's Bill Campbell predicts that aggressive interest rate cuts by the Federal Reserve will steepen the US yield curve, boost risk-taking in credit markets, and lead to wider yield differentials, especially as the US faces large maturing debt and potential policy easing amid weak labor data.
Wall Street's main indexes opened slightly lower amid concerns over the Federal Reserve's independence following President Trump's decision to fire a Fed governor, leading to a rise in Treasury bond yields.
Weak demand at a recent 30-year Treasury bond auction led to higher yields, signaling investor disappointment and potential concerns for the Treasury market, especially as similar issues appeared in 10-year and 3-year auctions this week.
Deutsche Bank's strategist proposes the 'Pennsylvania Plan' to manage US debt by reducing reliance on foreign investors and encouraging domestic investment, amidst limited appetite for direct fiscal reforms, with potential policy shifts including stablecoins and banking regulation changes to support the plan.
Global markets are entering a critical week with key inflation data and Treasury bond auctions that could influence the ongoing stock rally and Federal Reserve policy decisions, amid concerns over persistent inflation and economic growth.
Rising yields on 30-year US Treasury bonds above 5% since May 21st are causing concern among investors, especially as they coincide with the passing of a significant budget bill by the House of Representatives, highlighting potential economic risks.
The average rate on a 30-year mortgage in the U.S. decreased slightly to 6.78% this week, ending a six-week increase, according to Freddie Mac. This rate is lower than the 7.4% average from a year ago. The 15-year fixed-rate mortgage also saw a slight decrease. Mortgage rates are influenced by the yield on U.S. 10-year Treasury bonds, which have been rising due to economic growth and inflation expectations. Despite fluctuations, economists expect mortgage rates to remain around 6% in 2025, with the housing market continuing to experience a sales slump.
The average rate on a 30-year mortgage in the U.S. decreased slightly to 6.78% from 6.79%, ending a six-week increase, according to Freddie Mac. This rate is lower than the 7.4% average from a year ago. The 15-year fixed-rate mortgage also saw a slight decrease to 5.99%. Mortgage rates are influenced by the yield on U.S. 10-year Treasury bonds, which have been rising due to positive economic and inflation reports. Despite recent fluctuations, economists expect mortgage rates to remain volatile but hover around 6% in 2025. High rates and prices have contributed to a prolonged sales slump in the U.S. housing market.
October's inflation data met expectations, with the Consumer Price Index rising 2.6% year-over-year, slightly up from September's 2.4%. Core inflation remained steady at 3.3%, above the Fed's 2% target. This led to increased speculation of a December interest-rate cut, with market-implied probabilities rising to 79%. Minneapolis Fed President Neel Kashkari expressed optimism about inflation's direction. Markets reacted positively, with small caps outperforming, and Treasury yields and the dollar easing. Gold prices rose, and Treasury-linked ETFs saw gains.
Despite the U.S. economy's strong performance, the Treasury bond market is signaling a potential recession, with the yield curve between 10-year and 3-month Treasury bonds inverting, a historical precursor to economic downturns. While past recessions have seen significant declines in the stock market, investors are advised to stay invested and avoid attempting to time the market, as historical data shows that the stock market tends to rebound before recessions end, and long-term returns have remained positive despite economic downturns.
Sam Dogen, an early retiree, generated $380,000 in passive income last year through a portfolio of stock, bond, and real estate investments. He recommends starting with Treasury bonds for a 5% return, and also suggests investing in dividend-focused mutual funds or exchange-traded funds. While real estate can be profitable, Dogen advises starting with owning your primary residence to achieve "neutral" real estate.
Long-dated Treasury bonds experienced their largest two-day losses since 2020 and 2022, driven by strong U.S. economic data and Federal Reserve Chair Jerome Powell's comments cautioning against early interest-rate cuts. Yields on 2-, 10-, and 30-year Treasury bonds rose significantly, reaching their highest levels in months. Powell's remarks on "60 Minutes" and positive economic indicators, including a surge in nonfarm payrolls, have led to speculation about the Fed's interest-rate path and intensified concerns about "higher for longer" rates.