The rout in bonds today is not what anyone wanted to see.
Stocks are taking another beating so you would expect a flight to safety. The Fed was also more-hawkish so you would think there would be a bid in the long end on declining growth and inflation.
Instead it's the opposite, proving that markets always find a way to do what's least expected. Could it be a fuction of Japanese intervention?
Or could this be a global bond phenomenon with the UK spending more and Europe doing the same? We're inevitably heading towards an era of higher government spending, could we be at some kind of breaking point?
I doubt it's happening right now but I'm struggling to explain why long-dated bonds are blowing up.
Could it be technical? Long bonds have been the best trade of the 30 years before covid. Could the bond bulls be getting squeezed?
I really don't know but this is an ugly picture and risk assets certainly aren't turning around if this direction continues.
