The Biggest Story In Markets Right Now
To start 2015, long-dated government bonds from a number of major economies including the US, Germany, and Japan, have seen yields tumble. The drop in long-dated bond yields has been attributed to the decline in inflation expectations, particularly out of Europe, as well as concerns over global growth and a slowing pace of debt issuance from the Treasury department.
Speaking with Bloomberg News on Wednesday, long-time bond bull Lacy Hunt said the 30-year yield could fall as low as 2%.
"We’re in the money-management business, we’re not in the mind-changing business," Hunt told Bloomberg's Daniel Kruger. "We’ve thought for a very, very long time that the bond yield could go to 2 percent, or slightly lower, and that remains our view."Treasury Bond Yield Drops to Record Low Amid Fear of Global Deflation
LOW INFLATION: Treasury yields show traders are pricing in deflation for the next two years. The difference between yields on two-year notes and non-indexed U.S. government debt of comparable maturity, an indication of consumer prices called the break-even rate, fell to negative 0.13 percentage points, down from 1.96 percentage points in March 2014.
“Yields across the globe are going down and we’re still the highest yielders, the safest place to be, and that continues to drive dollars into this market,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “The bigger picture is that’s more important than anything, the amount of cash out there looking for a safe home.”
U.S. retail sales drop biggest in 11 months, but seen as a blip
(Reuters) - U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.
Global markets dive after World Bank cuts growth forecasts
U.S. stocks fell, extending losses in the Standard & Poor’s 500 Index to a fourth day, as a decline in American retail sales and slump in copper prices spurred concern that global growth is slowing.
“People are starting to get very nervous as commodity prices are faltering and we know it’s because the global growth rate has been brought down,” Tom Stringfellow, president and chief investment officer of San Antonio-based Frost Investment Advisors LLC, which manages about $10 billion, said in a phone interview. “The U.S. alone can’t support the world and the retail sales are a warning shot across the bow.”
Economic Growth
Concern about the impact of plunging oil on investment and what falling yields signal about economic growth are testing the resilience of U.S. stocks that have tripled since 2009. The stress pushed a Bank of America Corp. gauge of hedging costs in bond, stock, currency and commodity markets to an 18-month high last week.
“It’s a lot of little factors here that add up to one big mess, frankly,” said Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York. “Think about it like little tremors indicating an earthquake – crude price, copper price, overall index volatility, weakening data, retail sales data. Global growth is threatened.”DYI
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