Are Treasury Yields Rising TOO Fast?

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Bridgewater Founder Ray Dalio said back in January 2018 that “A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981.” 

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Well, we are still in a higher bond duration section of the Price/Yield curve where further increases in yield shifts can clobber Treasury prices.

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Like the recent decline in 10-year Treasury Note prices.

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Given that the US economy is exposed to an all-time high in interest rate senstivity, it would behoove The Fed to “take it easy.”

OFR duration

Merrill Lynch’s Option Volatiltiy Estimate (a yield curve weighted index of the normalized implied volatility on 1-month Treasury options which are weighted on the 2, 5, 10, and 30 year contracts) and the TYVIX 10-year volality index both spiked recently.

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So let’s see how far The Fed will keep on pushin’, perhaps too hard.

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Yes, Jay Powell & the Drecks from Washington DC are doing the “tighten up.” But should they slow down?

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Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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