US Treasury notes and bonds sold off hard on the FOMC meeting news today, especially the 5-year, 7-year, and 10-year maturities.
5-year 1.24 +17bps
7-year 1.76 +18bps
10-year 2.33 +13bps
The numbers look much worse compared to be beginning of the month. If this trend continues much longer, it is very bad news for mortgage rates, house prices, mortgage backed securities, and bonds in general. The Fed remains firmly in control of short rates, but things are starting to wobble in the rest of the curve.
Damage was not limited to bonds today. The DOW was down over 200 points, precious metals, and commodities also sold off. It is very unusual for everything to be this correlated, unless everything was pumped up with cheap credit that got margin called home.
For what it is worth, I took advantage of the selloff in bonds today (Thursday). I couldn't resist the 1%+ real yield on a 19 year TIPS.
ReplyDeleteStagflationary Mark,
ReplyDeletePositive real rates are tempting, except that they might be more tempting after further rises in rates. I'd like to see 2.5% hold on the 10 year for a while before buying more bonds.
Get out of bonds while you still can - we are at the end of a 30 year cycle and the bubble is bursting!
ReplyDelete