Bond Rally Seen on Collision Course With Inflation as Fed Punts
by
Bloomberg News
A rally in the $13.3 trillion market for U.S. government debt faces headwinds amid mounting evidence that consumer price...
A rally in the $13.3 trillion market for U.S. government debt faces headwinds amid mounting evidence that consumer price gains are starting to accelerate.
U.S. 30-year securities, the maturity most sensitive to inflation, rose for a second week even as a bond-market measure of consumer-price expectations closes in on its highest level this year. Goldman Sachs Group Inc. says the Fed’s preferred measure of inflation will end the year at about 1.8 percent, above even the central bank’s current forecast of 1.6 percent.
Inflation is a risk that "is new and coming into focus" said Richard Turnill, global chief investment strategist at BlackRock Inc., in an interview Thursday with Bloomberg Television. "Investors should be watching very closely for any signs that inflation expectations are picking up, that core inflation itself is picking up.”
While inflation is bad for bonds because it erodes the value of fixed Payments, Treasuries have gained in the face of rising oil prices and data showing an improving U.S. economy. That has sparked concern that the market isn’t adequately pricing the risks and investors may be caught off guard when yields move higher. The Fed last week kept its benchmark interest-rate target unchanged while projecting two increases later this year.
Benchmark U.S. 30-year yields fell one basis point this week, or 0.01 percentage point, to 2.67 percent in New York, according to Bloomberg Bond Trader data. The price of the 2.5 percent note due in February 2046 was 96 13/32.
Fed Bank of St. Louis President James Bullard, who votes on policy this year, said the U.S. central bank should consider rate increases sooner than later, in part because of the prospect of inflation overshooting the Fed’s target.
“Wages, according to anecdotal reports, will be picking up,” Bullard said after a speech Thursday in New York. "You have to react to the data and I have been a champion of that."
Flatter Curve
The 30-year Yield has also been falling because of the so-called flattener trade, selling shorter-term securities and buying longer-term debt. The yield on the two-year note rose this week, narrowing the gap with the 30-year bond to as low as 1.75 percentage points, close to the least since 2008.
"People feel relaxed about the threat from global growth and inflation," said David Keeble, New York-based head of fixed-income strategy at Credit Agricole SA. "The 30-year is looking at global inflation trends. The short end of the curve is domestic."
Core personal consumption expenditures rose 1.8 percent on a year-over-year basis in February, according to a Bloomberg survey before the March 28 report. A separate report April 1 is forecast to show the U.S. added 207,000 jobs, while hourly earnings climbed 2.3 percent from a year earlier.
The gap between yields on 10-year Treasuries and equivalent inflation-indexed securities, a gauge of trader expectations for consumer prices over the life of the debt, climbed as high as 1.67 percentage points this week, the highest since August.
The Fed "is going to be forced to react more aggressively" if it falls behind the curve on inflation, BlackRock’s Turnill said.
The U.S. will auction $26 billion of two-year securities on March 28. It will sell $34 billion in five-year notes March 29 and $28 billion in seven-year debt March 30.
To contact the reporter on this story: Susanne Walker Barton in New York at swalker33@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Paul Cox
A rally in the $13.3 trillion market for U.S. government debt faces headwinds amid mounting evidence that consumer price gains are starting to accelerate.
U.S. 30-year securities, the maturity most sensitive to inflation, rose for a second week even as a bond-market measure of consumer-price expectations closes in on its highest level this year. Goldman Sachs Group Inc. says the Fed’s preferred measure of inflation will end the year at about 1.8 percent, above even the central bank’s current forecast of 1.6 percent.
Inflation is a risk that "is new and coming into focus" said Richard Turnill, global chief investment strategist at BlackRock Inc., in an interview Thursday with Bloomberg Television. "Investors should be watching very closely for any signs that inflation expectations are picking up, that core inflation itself is picking up.”
While inflation is bad for bonds because it erodes the value of fixed Payments, Treasuries have gained in the face of rising oil prices and data showing an improving U.S. economy. That has sparked concern that the market isn’t adequately pricing the risks and investors may be caught off guard when yields move higher. The Fed last week kept its benchmark interest-rate target unchanged while projecting two increases later this year.
Benchmark U.S. 30-year yields fell one basis point this week, or 0.01 percentage point, to 2.67 percent in New York, according to Bloomberg Bond Trader data. The price of the 2.5 percent note due in February 2046 was 96 13/32.
Fed Bank of St. Louis President James Bullard, who votes on policy this year, said the U.S. central bank should consider rate increases sooner than later, in part because of the prospect of inflation overshooting the Fed’s target.
“Wages, according to anecdotal reports, will be picking up,” Bullard said after a speech Thursday in New York. "You have to react to the data and I have been a champion of that."
Flatter Curve
The 30-year Yield has also been falling because of the so-called flattener trade, selling shorter-term securities and buying longer-term debt. The yield on the two-year note rose this week, narrowing the gap with the 30-year bond to as low as 1.75 percentage points, close to the least since 2008.
"People feel relaxed about the threat from global growth and inflation," said David Keeble, New York-based head of fixed-income strategy at Credit Agricole SA. "The 30-year is looking at global inflation trends. The short end of the curve is domestic."
Core personal consumption expenditures rose 1.8 percent on a year-over-year basis in February, according to a Bloomberg survey before the March 28 report. A separate report April 1 is forecast to show the U.S. added 207,000 jobs, while hourly earnings climbed 2.3 percent from a year earlier.
The gap between yields on 10-year Treasuries and equivalent inflation-indexed securities, a gauge of trader expectations for consumer prices over the life of the debt, climbed as high as 1.67 percentage points this week, the highest since August.
The Fed "is going to be forced to react more aggressively" if it falls behind the curve on inflation, BlackRock’s Turnill said.
The U.S. will auction $26 billion of two-year securities on March 28. It will sell $34 billion in five-year notes March 29 and $28 billion in seven-year debt March 30.
To contact the reporter on this story: Susanne Walker Barton in New York at swalker33@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Paul Cox
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔