All articles tagged with #us treasuries
For the first time since 1996, central banks hold more gold than U.S. Treasuries, reflecting a shift towards hard assets amid geopolitical risks and a move away from dollar-denominated securities, with gold's share of reserves rising to about 18% in 2024.
Goldman Sachs and U.S. Treasury Secretary Scott Bessent anticipate a significant growth in stablecoins, which could lead to a multi-trillion dollar market and increase demand for U.S. government bonds, especially Treasuries, driven by new regulations and expanding payment markets. While some experts see potential for stablecoins to boost bond demand, others believe they mainly redistribute existing money without increasing overall debt demand.
The passage of Trump's large spending bill is expected to increase U.S. debt and deficits, prompting foreign investors to diversify away from Treasuries towards European bonds like German bunds, amid concerns over U.S. fiscal health and market volatility.
Investors and major firms like DoubleLine and Pimco are avoiding or underweighting the long-term 30-year US Treasuries due to concerns over rising debt, fiscal deficits, and changing demand, leading to a buyers' strike and speculation about reduced auctions, while the Treasury maintains steady issuance plans amidst market uncertainties.
Warren Buffett's Berkshire Hathaway has increased its holdings in US Treasuries to over $305 billion, making it a major holder of government debt, while simultaneously reducing its stakes in Citigroup, Bank of America, and Capital One, signaling a shift towards safer assets amid changing investment strategies.
US Treasuries have rebounded from losses incurred after Donald Trump's election victory, as investors reassess the impact of his policies on interest rates. The 10-year Treasury yield fell to 4.29%, reversing a spike to 4.48% post-election. Federal Reserve Chair Jay Powell emphasized the uncertainty of Trump's policy effects, contributing to the market's recalibration. The Fed's recent rate cut and skepticism about Trump's potential inflationary impact have also influenced investor sentiment.
US Treasury yields surged as Donald Trump appeared poised to win the 2024 presidential election, raising concerns about potential tax cuts and tariff hikes that could increase the deficit and inflation. The 10-year Treasury yield rose significantly, reflecting investor worries about higher government borrowing and inflation. Trump's victory, along with a potential Republican control of the Senate, has prompted fears among 'bond vigilantes' about the impact on future borrowing and the Federal Reserve's ability to cut interest rates.
Long-dated U.S. Treasuries are rallying, with the iShares 20+ Year Treasury Bond ETF (TLT) breaking its 2024 downtrend and surpassing its 50-day moving average, driven by weak economic data and increased expectations of a Federal Reserve rate cut in September. Other ETFs like Pimco's ZROZ have also surged. Upcoming U.S. labor market data will be crucial in shaping market expectations.
US Treasury sales struggled to attract buyers, leading to a sell-off in the bond market. Traders are analyzing mixed economic data and Federal Reserve remarks for policy direction. Treasury yields rose, with the 10-year yield climbing to 4.54%. The S&P 500 remained stable, while the Nasdaq Composite hit a record high. Key economic events and corporate highlights, including Chevron's acquisition of Hess Corp. and T-Mobile's purchase of US Cellular assets, were also noted.
Midas, a new stablecoin project, plans to introduce its stUSD token backed by U.S. Treasuries to decentralized finance (DeFi) platforms like MakerDAO, Uniswap, and Aave. The project aims to tokenize traditional finance (TradFi) assets, such as Treasuries, to make them available in the DeFi ecosystem. Midas intends to purchase Treasuries through BlackRock and use Circle Internet Financial's USDC stablecoin as an on-ramp. The Midas stUSD token is 100% backed by U.S. Treasuries and complies with European Securities Regulation and Anti-Money Laundering law. The team includes Fabrice Grinda and Dennis Dinkelmeyer, both associated with Global Technology Acquisition Corp. The retail launch is expected early next year.
The rally in long-duration US Treasuries, which has seen a significant drop in yields, can be attributed to a combination of factors. The Treasury Department's announcement of smaller-than-expected increases to longer-term debt auctions, coupled with soft economic data and hints from the Federal Reserve that it is unlikely to raise interest rates further this year, have contributed to the decline in yields. Additionally, the market reaction to the Fed's recent meeting suggests that investors believe the central bank is done hiking interest rates. The rally in bonds is also supported by weak manufacturing data and concerns about the state of the economy. While there are competing forces at play, including a weakening economy and massive debt issuance, the current consensus is that the top in yields has been reached.
Billionaire investor Bill Ackman covered his short bet on US Treasuries, citing too much risk in the world and a slowing economy. His three tweets caused a reversal in the bond markets, with yields on 30-year Treasuries falling after reaching a 16-year low. Ackman had previously disclosed his bearish stance on long-term Treasuries, citing structural changes and a flood of bond supply. The yield curve between the two-year and 10-year Treasury is the steepest it has been since mid-July, and more Treasury auctions are expected this week.
Asian markets may experience relief from the recent U.S. bond selling frenzy as Treasury yields briefly tumbled on Monday. However, doubts remain about the sustainability of this calm. Key economic data releases in the region include South Korean producer price inflation, flash purchasing managers index data from Japan and Australia, and a speech from the Reserve Bank of Australia governor. The ebb and flow of the U.S. Treasuries market continues to dominate the big picture, while late downward drifts on Wall Street and substantial capital outflows from China pose challenges for Asian and emerging market equities.
Vanguard, the second-largest asset manager in the world, is optimistic about long-term US Treasuries after a challenging summer for bond investors. They believe that the Federal Reserve has reached the end of its rate hiking cycle and that the economy will slow down next year, making long-term bonds attractive. Vanguard expects an economic recession and a potential cut in borrowing costs, which would push down prices of shorter-dated Treasuries and increase the appeal of longer-dated bonds. They also view high-quality corporates as an attractive option in the credit market.
The focus in Asian markets this week is on whether the U.S. Treasuries selloff will abate. While economic indicators and policy decisions in the region are limited, third-quarter GDP data from South Korea and consumer price inflation reports from Australia, Singapore, and Tokyo will be released. Flash PMI data from Japan and Australia will also be published. However, the broader market sentiment will likely be influenced by the U.S. bond market, which experienced a significant fall last week. Financial conditions have tightened globally, with China facing the tightest conditions since 2006. Chinese central bank governor Pan Gongsheng has pledged to make policy more "precise and forceful" to reduce financing costs. The yen and yuan are under selling pressure, and Bank of Japan intervention is being watched. Japanese and Australian PMI data for October will be released.