So the bond vigilantes threw a party and sold off, spiking yields across the board 1.44% on the day, throwing down the gauntlet at Warsh, daring him to cut in the face of all the chaos Trump is causing.
The 20-year soared to 5.14%.
Yields are up 2.8% in the aggregate since the beginning of the month.
6% inflation is knocking on the door.
Inflation rate projected to hit 6% in the second quarter, top economic forecasters say
... Britain’s government bonds have the highest yields in the G7. ...
Under Powell core pce inflation exceeded 10Y yield for 4 consecutive years (2020-2023).
Under Burns it was for only 2 (1974-1975).
The Bernank was Fed chair in 2012 when inflation only just barely outran 10Y yield.
... "By allocating to RMB bonds, foreign investors can reduce portfolio volatility and improve risk-adjusted returns." ... "In the face of frequent geopolitical risks, the safe-haven role of RMB bonds has emerged," Yu said, adding that as the RMB internationalization progresses, demand for RMB assets as reserves is growing, and this is expected to support the growth of RMB bonds holdings by central banks and sovereign wealth funds.
LOL, what a crock.
Foreign investors own less than $1 trillion of Chinese debt, compared with over $9 trillion of U.S. debt.
... [U.S.] Treasuries are relied upon by global central banks as the pre-eminent reserve asset, since the $30tn market for the securities is the biggest and deepest in the world. ...
More.
Thank you for your attention to this matter.
DXY: 99.893
Foreign central banks sell US Treasuries in wake of Iran war
Markets now see the Fed’s next move as a potential rate hike as inflation fears mount
... Traders in the futures market pushed the probability of a rate increase by the end of 2026 to 52% on Friday morning, the first time it has crossed the 50% threshold, according to the CME Group FedWatch tool. ...
Gold heads for seventh straight monthly gain on safe-haven demand
... The metal has climbed 6.5% so far in February, bringing gains for the seven months to a whopping 58%. ... The benchmark 10-year yield fell to a three-month low on the day, decreasing the opportunity cost of holding non-interest-paying gold. ...
Worries about softening employment have been entirely misplaced. Jobless claims have been FLAT for four consecutive years.
The Fed was wrong about jobs, just like it was wrong about inflation being transitory.
One path to U.S. fiscal disaster is most alarming — and most likely
... An Everest of debt is an incentive for an inflation crisis to reduce the value of existing debt by paying lenders with debased dollars. But inflation would become baked into the expectations of investors, who would demand higher interest rates. Then R>G would bite: When interest rates paid on debt exceed the rate of economic growth, a crisis intensifies as rising interest rates depress economic growth. ... The most probable, and most ominous, outcome would be a gradual crisis. ... Nothing unsettles a middle-class nation more rapidly than inflation, a component of all of these crises. ...
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| Yield on the 10Y is still lower but is saying Me Too |
"The dollar is going to collapse", he said.
"The dollar is going to be replaced by gold", he said.
Central banks "are getting rid of dollars", he said.
"They're getting rid of treasuries", he said.
None of that is true.
The nominal broad dollar index remains relatively strong.
Even foreign official ownership of treasuries is up slightly year over year, shifting slightly from long dated securities to short, while total foreign ownership is up solidly.
Meanwhile fiat currencies represented about 78% of the value of total global international reserves yesterday. The U.S. Dollar alone represented about 55% of the value, followed by the Euro close to 20%.
Gold is not going to replace the dollar.
But Peter will be happy to sell you some, especially today lol.
10-year Treasury yield rises after Fed keeps rates steady, notes ‘solid’ economy
... “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the post-meeting statement said. “Inflation remains somewhat elevated.” ...
“I think, and many of my colleagues think, it’s hard to look at the incoming data and say the policy is significantly restrictive at this time,” Fed Chair Jerome Powell said in a press conference. ...
The economy should be three times the size it is, $90.4 trillion in GDP instead of $31.1 trillion.
