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Bonds Tank After Jobs Report: 10-Year Yield Soars To 2.7%

Friday, July 5, 2013 - 5:14 PM
Markets made some big moves after this morning's June jobs report. Of note is the tumbling bond market where the 10-year Treasury note yield surged to as high as 2.70%, from around 2.55% ahead of the report. This is the highest level since August 2011.

"In light of the better-than-expected labor market data over the past few months, we are bringing forward our call for the Fed tapering QE purchases from the December FOMC meeting to the September meeting," said Goldman's Jan Hatzius. "We expect that purchases may be reduced from the current rate of $85bn per month to $65bn per month, with most or all of the adjustment occurring through reduced Treasury purchases."

10-Year Note Yield Jumps - Business Insider
13
ShorebreakShorebreak2,371 posts since
Apr 6, 2010
Rep Points: 12,629
1. Friday, July 5, 2013 - 9:45 PM
Shorebreak,

If you keep up with all this relentless depressing news, you'll turn me into a chain-smoker and poor Paoli won't be able to keep up with the Mylanta! And don't be surprised if I start calling you "Cassandra" from now on. More seriously, though, if you could give us a heads up when there's a temporary (I suppose) bond rally, let us know so that we could lighten up on bonds without taking too big of a hit. Thanks!

P.S. I bet you'll tell me that bonds are never going to rally, even if for a few days, and that we should head for the doors now, aren't you?
7
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,281
2. Saturday, July 6, 2013 - 9:45 AM
"While the Fed has noted that downside risks have diminished somewhat, the economy has yet to achieve escape velocity, and unemployment is still stubbornly high and structural in nature. At the same time, with inflation well below the central bank’s 2% goals, those who are selling Treasuries in anticipation of the Fed easing out of the market might be disappointed. So although we may see some tapering, possibly by the end of the year, we do not expect the Fed to remove the trough for some time or – critically for bond prices – notch up its policy rates until 2015 or beyond. Rates will fluctuate over the shorter term, of course."

Which way for bonds? Mapping a path forward

http://www.pimco.com/EN/Insights/Pages/Which-way-for-bonds-Mapping-a-path-forward.aspx
8
ShorebreakShorebreak2,371 posts since
Apr 6, 2010
Rep Points: 12,629
3. Saturday, July 6, 2013 - 1:43 PM
Shorebreak,

Thanks for the link. I read the article. Gross seems to be saying much of what I've read already. Much of my bond portfolio is global, and I've been careful about duration for the last couple of years. Paradoxically, though, the foreign bonds have been more volatile than the domestic corporate bonds (I already bailed out of domestic government bonds) lately. Oh well, maybe I should just get a bottle of Mylanta and pretend everything's happy in the world.
5
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,281
4. Saturday, July 6, 2013 - 3:30 PM
The Mylanta doesn't work if you fill the bottle half with gin or whatever your favorite of the day is, Wil.  Got to gulp the chalky crap as is.  I tried stuffing some of my Burgundy meatballs in it and that didn't even help the taste!:)  Just pretend Paoli isn't on DA anymore and that should help you to pretend everything's happy in the world.
2
paoli2paoli21,142 posts since
Aug 10, 2011
Rep Points: 5,091
5. Saturday, July 6, 2013 - 11:17 PM
Guys, this is good news. We should be very happy to see the 10-year treasury yield go up. I am hoping it continues to rise, despite all the Fed QE programs. With some luck, it would be great to see 4% yields on the 10-year before year-end.
4
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
6. Sunday, July 7, 2013 - 8:23 AM
Good news for you Lou since you probably will still be here in 10 years but we must remember we have "seniors" on DA.  I am not one of them, of course, but I still don't risk going out longer than 5-6 years on a CD.  Just a personal thing preparing for the day when I do become a "senior".
1
paoli2paoli21,142 posts since
Aug 10, 2011
Rep Points: 5,091
7. Sunday, July 7, 2013 - 12:01 PM
Paoli, CD rates will not go up (what everyone hopes for) unless it is preceded by treasury rates going up as well.  Although it isn't mentioned here, the 5-year treasury yield has also increased by 100 basis points in the last 2 months. It is not logical to lament this increase in rates and also wish for more attractive CD rates.
4
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
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