An analyst note from Barclays on Friday last week on the cascade lower for bonds:
- “There is no magic level of yields that, when reached, will automatically draw in enough buyers to spark a sustained bond rally,”
- “In the short term, we can think of one scenario where bonds rally materially. If risk assets fall sharply in the coming weeks.”
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“The magnitude of the bond selloff has been so stunning that stocks are arguably more expensive than a month ago, from a valuation standpoint”
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“We believe that the eventual path to bonds’ stabilizing lies through a further re-pricing lower of risk assets.”
More:
- The Fed is unlikely to dial back its quantitative tightening program (and thus the Fed will remain a net seller of Treasuries)
- The increase in bond supply due to the rising deficit is also driving up the term premium
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US 10 year yields, weekly candles:
On the bright side, the yield has backed off from 5%