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.”
“The magnitude of the bond selloff has been so stunning that stocks are arguably more expensive than a month ago, from a valuation standpoint”
“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%
