The bond market has gotten slaughtered lately, which means interest rates are going up. The party had to end sometime. From Wolf Richter at wolfstreet.com:
“Neutral rate” creeping higher? Oh dearie! Bloodbath at the long end.
The 10-year Treasury yield jumped 14 basis points today to 4.49%, the highest since October 2007. Bond prices fall when yields rise, so this was quite a bloodbath today at the long end of the Treasury market.
“Neutral rate” creeping higher? Oh dearie!
It seems the Treasury market is gradually reading the memo that has been passed around for about a year. The subject line says: “Higher for longer,” and yesterday someone scribbled next to it, “maybe forever?”
Yesterday’s “dot plot” from the Fed underlined a few things in that memo. It indicated shockingly that the policy rates might still be 5.25% at the end of 2024, rather than 4.75% top of range, as it had indicated in June.
