Rising US bond values to a 'dangerous' level, with a risk of reversal due to substantial interest rate cuts being factored in.
September 4, 2024, 1:45 JST (excerpt)
Excluding the economic downturn, it incorporates a rapid pace of interest rate cuts not seen since the 1980s.
There is also a risk that the flow of bond highs will reverse if the US economy unexpectedly shows strong resilience.
The US bond market has seen a significant rise in anticipation of the near commencement of interest rate cuts by the US financial authorities as they fight a recession. There is a risk of underestimating the resilience of the US economy again, and if there is an unexpected upward trend, there is a risk of a reversal in the flow of bond highs.
In the trading on the 3rd, government bonds rose. The yield on the 2-year bond decreased from over 5% in late April to about 3.85%, the longest upward trend since 2021 in the past four months.
The market is supported by expectations that the US financial authorities will lower the policy interest rate by more than 2 points over the next 12 months. Excluding the recession phase, this will be the most rapid pace of interest rate cuts since the 1980s.
Excluding the economic downturn, it incorporates a rapid pace of interest rate cuts not seen since the 1980s.
There is also a risk that the flow of bond highs will reverse if the US economy unexpectedly shows strong resilience.
The US bond market has seen a significant rise in anticipation of the near commencement of interest rate cuts by the US financial authorities as they fight a recession. There is a risk of underestimating the resilience of the US economy again, and if there is an unexpected upward trend, there is a risk of a reversal in the flow of bond highs.
In the trading on the 3rd, government bonds rose. The yield on the 2-year bond decreased from over 5% in late April to about 3.85%, the longest upward trend since 2021 in the past four months.
The market is supported by expectations that the US financial authorities will lower the policy interest rate by more than 2 points over the next 12 months. Excluding the recession phase, this will be the most rapid pace of interest rate cuts since the 1980s.
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