A strong week in bonds continued into the morning on Friday. The ten-year rallied to 2.27%, level with the low yields we saw in July, before bonds sold off to finish about unchanged as issuers rushed to lock in low yields ahead of this week’s large corporate issuance.
A full economic calendar this week will begin tomorrow with August PPI, and will warm up the inflation watchers for August CPI on Wednesday. Easy money fedspeak, and strong demand for government debt at auctions have sent yields lower over the past month despite a risky asset market that is pricing in a pretty strong economic recovery, all while the dollar has continued to weaken. So what gives? Who has it wrong?
To complicate the situation even further, the administration’s decision to levy an import tax on Chinese tires is being felt in the Treasury market this morning. At a time when the government is relying heavily on foreign buyers of Treasuries – the biggest being China – to fund spending and keep rates low, protectionist decisions like these do not seem logical. Treasuries are weaker to begin today on the news.
Cliff J. Reynolds Jr., Investment Analyst
To complicate the situation even further, the administration’s decision to levy an import tax on Chinese tires is being felt in the Treasury market this morning. At a time when the government is relying heavily on foreign buyers of Treasuries – the biggest being China – to fund spending and keep rates low, protectionist decisions like these do not seem logical. Treasuries are weaker to begin today on the news.
Cliff J. Reynolds Jr., Investment Analyst
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