- The unprecedented demand for U.S. Treasuries at last week’s auction - even as the 10-year yield approached its 50-day moving average - speaks volumes. Yields did slip notably last Friday back below 1.3% (the day after the auction), closing below their 200-day moving average.
- The message of higher bond yields early last week signaled an improving economy because of COVID success as well as rising inflation due to bottlenecks and monetary policy, all part of the normalization process. The message of sharply lower bond yields seems to be the opposite of that.
- Junk bonds, for the first time, saw their yields fall below the level of inflation. That had never happened before the decision of the Federal Reserve to intervene as aggressively as it has since early 2020.
For further details see:
More Drama In The Treasury And Junk Bond Markets