ESGB - The Quandary In The Bond Markets
2024-05-06 10:45:00 ET
Summary
- The "value proposition" is almost nowhere to be found as the Treasury’s inverted curve make the normal "duration play" a shambles, and as the Fed doesn’t seem to be decreasing yields any day soon.
- The highest-yielding Treasury is the three-month bill at 5.39%, which is 57 basis points more than the two-year Treasury, 88 basis points more than the ten-year Treasury and 73 basis points more than the thirty-year Treasury bond.
- Once the Fed turns the corner, we are going to see a massive upheaval in yields where losses will be staggering in longer-dated securities.
We have rarely seen such a mishmash in the bond markets. It is not only in Treasuries but in the spreads to Treasuries in the other capital markets. The "value proposition" is almost nowhere to be found as the Treasury’s inverted curve make the normal "duration play" a shambles, and as the Fed doesn’t seem to be decreasing yields any day soon....
The Quandary In The Bond Markets