Bond Trading Is Only for the Brave in This Shock Rally
Invest at your own risk after a rapid dovish shift among central banks.
Volatility is returning.
Photographer: Uwe Zucchi/AFP/Getty Images
It’s bad enough writing about another steep plunge in bond yields across the globe and prognosticating about the market’s next move. It’s almost certainly worse to be putting money on the line.
Just some things to consider: The benchmark 10-year Treasury yield fell to as low as 2.35 percent, a level unseen since 2017, from 2.62 percent just a week ago. Yields on two-year notes, which drew strong demand at a $40 billion auction on Tuesday, reached 2.16 percent as more than one full rate cut from the Federal Reserve is priced in by the end of the year. Elsewhere, Germany sold 10-year bunds with a negative yield for the first time since 2016, while New Zealand 10-year yields tumbled by 11 basis points after its central bank said its next move is more likely to be a cut.