US Treasury 10-year yields (%) monthly chart
The rout in Treasuries continues to be the key story in markets over the last few months and we’re now seeing 10-year yields on approach towards the 5% mark – last seen all the way back in 2007. It’s a scary thought that this is all coming after the fact that the Fed has chosen to pause on rate hikes. And while the story seems to be driven by the waves of supply in the bond market, the technicals might argue that this is the product of a squeeze in one of the longest bubbles in financial markets:
US Treasury 10-year yields (%) monthly chart
For the longest of time and in the world before Covid, staying long in Treasuries seemed like a given as we have gone on with nearly four decades of bonds gaining value and yields heading towards 0%.
The pandemic may be a devastation to humanity but it has certainly breathed life into a market that seemed destined for one possible future only at the time. And here we are now, talking about 5% rates again when it was seemingly an impossibility just a little over three years ago.
For today, yields are staying higher in European trading and that is the main thing to watch: 5%.. Ready or not? Here we go..