US Treasury yields surge as Fed and oil pressure bonds
Fed pricing has turned more hawkish, oil has surged and Treasury yields have backed up hard. Here’s how the pieces fit together.
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Everyone’s suddenly talking about bonds again, and there’s a simple reason why: they’ve had a very bad month.
US Treasury yields have backed up sharply across the curve, with some of the recent moves in the front end and belly ranking among the more extreme seen over the past quarter-century.
In this video, David Scutt looks at what’s been driving the sell-off, why Fed rate expectations are only part of the story, and why the relationship between crude oil and longer-dated Treasury yields is stronger than the front-end of the curve.
The answer provides a pretty good guide as to what may need to change before the current trend starts to reverse. Given how important bonds are for broader markets, this is useful context no matter what you trade.
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