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Why bond investors quickly lost their enthusiasm for weak jobs figures
Confirmed
In Short: Global bond yields surged despite lower-than-expected US inflation data, reflecting investor concerns over persistent high oil costs and inflation risks.
Global bond yields surged on Thursday, intensifying a sell-off that has been driven by fears of high inflation and rising borrowing costs.
The 10-year US government bond yield reached its highest level in 24 years, surpassing 5 percent for the first time since 2023 and only the second time since the 2008 financial crisis.
In the UK, the yield on 30-year bonds hit 6 percent for the first time since 1998, before easing slightly later in the day.
Neil Wilson, an investor strategist at Saxo UK, described the situation as 'carnage in the bond market, which is hitting stocks hard.
The bond market sell-off is being fueled by concerns over inflation, particularly due to persistently high oil costs and the ongoing Middle East conflict.
Despite better-than-expected GDP figures in South Africa, the country's benchmark 2035 government bond weakened, with the yield rising to 9.495 percent.
Analysts noted that South Africa's below 1 percent growth rate reflects a subdued economy facing structural challenges.
In the US, Treasury Secretary Scott Bessent dismissed doubts about his interventions in currency and bond markets, daring investors to bet against him.
The rising bond yields pose a political problem for the Trump administration, as they translate to higher borrowing costs for Americans.
ECB policymakers have warned of prolonged inflation risks, citing reduced refining capacities that cannot be rebuilt quickly.
Family offices and ultra-high-net-worth investors are increasingly investing in oil and gas assets, following the war in Iran and the AI boom.
The Euro traded mixed on Monday as investors looked ahead to next week's Eurozone inflation data, with expectations growing for the European Central Bank to resume raising interest rates in September.
What this adds
The bond market sell-off intensified despite lower-than-expected US inflation data, indicating that investors remain cautious about future economic conditions.
The surge in bond yields and the subsequent sell-off in stocks reflect a broader market sentiment of uncertainty and caution.
What's confirmed
- Investors can either make a “direct, non-refundable contribution of $350,000 to the National Treasury” or “subscribe to an $800,000 government bond created specifically” for the purpose.
What's still developing
- He’s widely regarded as one of the shrewdest investors in Wall Street history.
- Over six decades, Buffett transformed Berkshire Hathaway from a failing textile company into a $1.1 trillion conglomerate while building an investment philosophy that influenced generations of investors and executives, making him one of the most consequential figures in modern corporate America.
- “Inflation, deficit and issuance concerns continue to weigh on the bond market,” he said.
- The threat of a renewed round of inflation from the persistently high cost of oil has spooked investors on both sides of the Atlantic, with central banks expected to raise interest rates in the coming months to prevent price increases from becoming embedded.
- Stock market investors sold heavily too, knocking almost 1.7% off the FTSE 100 in London – its worst daily fall since May.
- US bonds weakened despite inflation data on Wednesday coming in lower than forecast, which was expected to calm investors’ nerves about the prospect of further increases in the cost of borrowing by the US Federal Reserve.
- This indicates some investors are selling into recent gains, reflecting cautious sentiment among these groups, as no immediate bullish catalysts are in sight.
- Similarly, the Coinbase Premium Index, an indicator of US investors' sentiment, is trending upward again after days of declines, though it remains in negative territory.
- The move shows US-based investors are shrugging off bearish sentiment from the Clarity Act's failure and rate hike.
- Ethereum (ETH) climbed above $2,700 on Monday after investors defended the realized price level despite negative sentiment over the Clarity Act's failure and the Federal Reserve rate hike.
- Investors quickly initiated buying pressure near the level, pushing ETH above $2,700.
- With investors defending the realized price instead of selling near it, the move indicates an upside bias amid a consolidation over the past week.