The Economic Information Daily reported on the 7th that international oil prices fell, coupled with U.S. Treasury Secretary Bessent's insistence that government debt burdens are manageable, causing U.S. bond yields to retreat from their highest levels since 2002. The yield on 10-year U.S. Treasuries dropped 2 basis points on Tuesday (6th) to 5.28 percent, while the two-year yield also declined by approximately 2 basis points to 4.8 percent.
Bessent stated on Monday (5th) that economic growth combined with restrained fiscal spending could curb the federal deficit. However, investors remain skeptical of his claims. Macquarie strategists pointed out that given the deficit stands at 6 percent of GDP and there is a lack of concrete reduction plans, the market is highly doubtful of Bessent's assurances.
Strategist Skylar Montgomery Koning believes that the U.S. economy remains resilient under high interest rate conditions, and financial conditions remain loose; thus, it would be difficult for U.S. bonds to see a significant rebound before there is clear evidence that rates are truly starting to suppress the economy.
Additionally, as long-term U.S. bond yields hover near 24-year highs, traders have further increased their short positions in U.S. Treasuries, indicating that despite significantly slowing job growth signaling economic cooling, the market still bets on continued U.S. bond sell-offs.
Citigroup strategists noted that market positioning on U.S. bonds remains at extremely high short levels, suggesting persistent bearish sentiment, and Tuesday's market movement may only represent a brief respite. (rc)
Bessent stated on Monday (5th) that economic growth combined with restrained fiscal spending could curb the federal deficit. However, investors remain skeptical of his claims. Macquarie strategists pointed out that given the deficit stands at 6 percent of GDP and there is a lack of concrete reduction plans, the market is highly doubtful of Bessent's assurances.
Strategist Skylar Montgomery Koning believes that the U.S. economy remains resilient under high interest rate conditions, and financial conditions remain loose; thus, it would be difficult for U.S. bonds to see a significant rebound before there is clear evidence that rates are truly starting to suppress the economy.
Additionally, as long-term U.S. bond yields hover near 24-year highs, traders have further increased their short positions in U.S. Treasuries, indicating that despite significantly slowing job growth signaling economic cooling, the market still bets on continued U.S. bond sell-offs.
Citigroup strategists noted that market positioning on U.S. bonds remains at extremely high short levels, suggesting persistent bearish sentiment, and Tuesday's market movement may only represent a brief respite. (rc)
