Home » Far beyond the 2008 financial tsunami!The yield of U.S. bonds broke through 5%, and the yield inversion was the worst in 40 years. “Investors are unwilling to venture into the stock market” – yqqlm

Far beyond the 2008 financial tsunami!The yield of U.S. bonds broke through 5%, and the yield inversion was the worst in 40 years. “Investors are unwilling to venture into the stock market” – yqqlm

by admin
Far beyond the 2008 financial tsunami!The yield of U.S. bonds broke through 5%, and the yield inversion was the worst in 40 years. “Investors are unwilling to venture into the stock market” – yqqlm

Original title: Far beyond the 2008 financial tsunami! The yield of U.S. bonds broke through 5%, and the yield inversion was the worst in 40 years. “Investors are unwilling to rush into the stock market”

FX168 Financial News (Hong Kong) News The US 1-year Treasury yield has broken through 5%, and the inversion of the 2-year and 10-year US Treasury yield curves has hit the worst in 40 years, far exceeding the financial tsunami in 2008. Investors Unwilling to take the risk of entering the stock market. The inversion suggests that while investors expect higher short-term interest rates, they may be growing concerned about the Fed’s ability to control inflation without significantly hurting economic growth.

Powell said in the hearing on the first day: “The current trend shows that the Fed’s anti-inflation work is not over yet. If the overall data shows that the central bank needs to accelerate tightening policy, it will be ready to accelerate the pace of interest rate hikes.”

This means that Powell hinted that raising interest rates by 50 basis points in March is still an option considered by the Fed, and the terminal interest rate may be higher than previously expected. Nick Timiraos, a Wall Street Journal reporter known as the “Fed microphone”, wrote that this is the first time that Powell has publicly admitted that the pace of raising interest rates by 25 basis points is not static.

An inverted yield curve occurs when yields on shorter-dated Treasuries are higher than those on longer-dated Treasuries. That suggests that while investors expect interest rates to rise in the short term, they believe higher borrowing costs will ultimately hurt the economy, forcing the Fed to ease monetary policy later.

See also  Active ETFs: These 25 up-and-coming funds deliver lucrative excess returns

According to a 2018 report by researchers at the San Francisco Fed, since 1955, the 2/10-year Treasury yield curve has inverted between 6 and 24 months before each recession. During that time it only signaled the error once. The study focuses on the part of the curve between 1-year and 10-year yields.

Anu Gaggar, global investment strategist at Commonwealth Financial Network, found that the 2/10 spread has reversed 28 times since 1900. Of those, 22 will be recessions, she said in June 2022. Over the past six recessions, on average, recessions have started between six and 36 months after the curve inverts, she said.

The yield on the 2-year U.S. Treasury bond exceeded 4.8%, hitting a new high since 2007, and the yield on the 10-year Treasury bond once exceeded 4% last week, hitting a new high since November 10 last year.

World Government Bond data show that in the past one-month, three-month, six-month, one-year, two-year, five-year, and 10-year U.S. Treasury yields have risen by 0.13 in the past month %, 0.18%, 0.22%, 0.19%, 0.37%, 0.37%, 0.24%.

(Source: WGB)

Some investors believe that the rise in U.S. bond yields means that investors are more inclined not to take risks in the stock market, and can obtain 5% or more returns by buying short-term U.S. bonds or other high-grade bonds.

It is also worth noting that the inversion between the 2-year and 10-year US Treasury yields has reached as high as 91 basis points, the highest level since the early 1980s, and even far exceeded the dot-com bubble burst in 2000, 2008 magnitude at the onset of the global financial crisis.

See also  China's holdings of U.S. debt fell to 12-year low last year

(Source: YCharts)

The inversion of the yield curve is an abnormal phenomenon in which the short-term yield rate is higher than the long-term yield rate. Since the 1980s, the United States has experienced five severe economic recessions, and each time there has been an inversion of the yield curve. Therefore, Investors are worried that the same fate will not escape this time, so they are not optimistic about the market outlook.

Irene Tunkel, chief U.S. equity strategist at BCA Research, told Reuters that the market is currently on the sidelines and that this week will be key to finding out what’s going on with the U.S. economy: “People are worried about the jobs data and the economic data because they’re worried about what the Fed will do and what will ultimately happen. It’s all about the Fed.”

Shawn Cruz, chief trading strategist at TD Ameritrade, said bluntly that the United States still has a lot of work to do in curbing inflation. At present, it has not seen the kind of slowdown in demand that people need to see, and the Fed’s interest rate hike is a means to slow the economy.

According to CME’s Fed Watch forecast data, the market currently expects that the possibility of the Federal Reserve raising interest rates by 25 basis points and raising the benchmark interest rate to 4.75-5% at the interest rate decision-making meeting on March 22 is 26.5%; basis points, the possibility of raising the benchmark interest rate to 5-5.25% is 73.5%.

(Source: CME)

See also  Real estate credit "stable and orderly" will not change

As of the close on Tuesday (March 7), the Dow Jones fell 574.98 points or 1.72%, closing at 32856.46 points; the Nasdaq index fell 145.4 points or 1.25%, closing at 11530.33 points; the S & P 500 index fell 62.05 points or 1.53%, Closed at 3986.37 points; the Philadelphia Semiconductor Index fell 32.17 points, or 1.07%, to close at 2962.42 points.

]]>Return to Sohu to see more

Editor:

Disclaimer: The opinions of this article represent only the author himself. Sohu is an information release platform, and Sohu only provides information storage space services.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy