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-- 23.930 Are rising US bond yields, and expectations for drastic interest rate cuts receding, and an opportunity to buy in reverse?
This article uses automatic translation for some of its parts
The yield of the US bond market rose drastically during the week, which was the first trading day in 2024, and it looked like it would join the global bond sales trend. Major central banks in Europe, America, etc. will this yearThe view that interest rates will be cut drastically has recededDoing it.
It is an indicator of long-term interest rates $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$It temporarily rose from the 3.8% range to a high level of 4.1% for the first time in about a month. $U.S. 30-Year Treasury Bonds Yield (US30Y.BD)$It also rose from 4.0% to over 4.2%.
Early interest rate cut observations receded in response to statements made by senior officials of the US Federal Reserve (Fed), disclosure of the summary of proceedings of the US Federal Open Market Committee (FOMC) in December, and employment statistics that were stronger than market expectations, etc., and the movement to let go of US bonds spread.
“The market may be expecting the Fed to cut interest rates this year, but since many interest rate cuts have already been factored in, there is a high possibility that market expectations will moderate. Assuming that part of expectations for interest rate cuts has been factored in, the US dollar will rise first, and there is a possibility that 2024 will end softly,” says Jane Foley, in charge of FX strategy at Rabobank.
Meanwhile, according to a strategist from Bloomberg's Markets Live team, the dollar has rebounded in the past few days, but there is a high possibility that it will turn to decline again. They believe that the Fed is cutting interest rates more aggressively than other major central banks, and there is a possibility that the period will be earlier.
Also, some tradersThe temporary rise in US bond yields is an opportunity to buyI'm watching it.
Priya Misra, portfolio manager at JPMorgan Chase Capital Management, said, “If it's in the yield range of 4% to 4.2%, it's worth buying anywhere.” He pointed out that the US 10-year bond yield before the Fed interest rate decision meeting last month was the upper limit of this range, and stated that “in order to break through 4.2%, it will be necessary to completely stop raising interest rates or cutting interest rates completely.” Considering the Fed's change in direction at the end of 2023 and the indication that “interest rate hikes will end” in the December minutes, it is said that both are unlikely. In other words, according to him, it is unlikely that the price of US bonds will be any lower.
“The bond market maintains an optimistic view that the Fed will cut interest rates this year. “The perception that a temporary decline is an opportunity for reverse buying will not change once with stronger employment statistics than expected,” Kevin Flanagan, who is responsible for bond strategy at WisdomTree, pointed out.
Regarding the employment statistics for December 2023 announced by the US Department of Labor on the 5th, Bloomberg Economics economist Anna Wong and others said, “The only good news in the December employment statistics is that the number of people employed in the non-farm sector has increased surprisingly. Other items are overflowing with signs that the labor market is rapidly cooling down. The number of employed people based on household budget surveys has declined on a large scale since April 2020. It was analyzed that “the period of unemployment has been prolonged, the labor participation rate has declined, the number of people working part-time for economic reasons has increased, and working hours have decreased.”
Also, the comprehensive non-manufacturing index for 2023/12 announced by the Rice Supply Management Association (ISM) on the 5th declined, indicating that activity almost stagnated. The employment index showed a drastic contraction in activity for the first time in about 3 years. The employment index fell sharply to 7.4 points to 43.3, the lowest level since July 2020. It is said that if the deceleration in the service industry continues, there is a possibility that concerns will increase that the activity of the US economy as a whole will slow down.
In the summary of the Federal Open Market Committee (FOMC) proceedings from 2023/12/12 to 13 announced by the US Federal Reserve (FRB) on the 3rd, it became known that some officials are prepared to begin discussions for the end of balance sheet compression (quantitative tightening = QT).
According to the summary of proceedings, multiple officials stated that the FRB balance sheet plan shows that when the balance of reserves somewhat exceeds the level judged to be sufficient, the compression pace is decelerated and then stopped. “These participants began discussing technical factors leading to such decisions long before they reached a decision to slow down the compression pace, and generally expressed the idea that it is appropriate to give sufficient advance notice.”
Mr. Blake Gwynn, the person in charge of the US interest rate strategy at RBC Capital Markets, said, “Everyone will maintain the plan until they are hit,” and “last time, the authorities were 'hit' by the repo market turmoil in September 19, and immediately changed direction.” He expects the QT phase to end in mid-'24.
The probability of interest rate cuts in March incorporating US interest rate futures is around 60%, and market interest rate cuts are still strong.
Senior interest rate strategist Koshimizu Naokazu of Nomura Securities pointed out that “there are still positions that anticipate a decline in interest rates, and if such positions are resolved, there is a possibility that interest rate increases will be spurred.”
Also, in the US bond market this week, there is a double test between the December US Consumer Price Index (CPI), which is an important indicator, and the 37 billion dollar 10-year US bond bid.
moomoo news~ Zeber
Source: Bloomberg, Nihon Keizai Shimbun, CME, Reuters
This article uses automatic translation for some of its parts
Source: Bloomberg, Nihon Keizai Shimbun, CME, Reuters
This article uses automatic translation for some of its parts
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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181338057犬心久美子 : Somehow the reliability of US bonds is so strong![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
But after all, 2 years, 5 years? About![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
treasury pound, etc.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
I wonder if it's good
I don't exist in this world
千葉 : After all, I'm a wimp, I made a profit of Diamond
too fast! I don't have enough patience, even though this happened twice last year
千葉 :
Any president is fine, so please come back young.