I agree with the political analysis. The politics are moving in this higher yield direction. Bessent's job has gotten harder. He has called himself "the nation’s most important bond salesman." Meanwhile he actually calls himself a gold bug (a podcast long time ago). However, when large institutions need to park significant money for any duration, they do treasuries. Why? Because there is no alternative. At least not yet. What do you see as a large liquid alternative to treasuries? Is the market just pricing in the lack of alternatives?
I think you mean they park money in bills rather than long dated treasuries.... The weird thing is inflation encourages more spending - why save money when it just disappears...
It seems rates are managed by the Treasury even if there is no evidenxe supporting the thesis. Everything is pointing towards 150bps higher in long yields but at certain levels there’s always an invisible hand preventing the fall.
I agree with the political analysis. The politics are moving in this higher yield direction. Bessent's job has gotten harder. He has called himself "the nation’s most important bond salesman." Meanwhile he actually calls himself a gold bug (a podcast long time ago). However, when large institutions need to park significant money for any duration, they do treasuries. Why? Because there is no alternative. At least not yet. What do you see as a large liquid alternative to treasuries? Is the market just pricing in the lack of alternatives?
I think you mean they park money in bills rather than long dated treasuries.... The weird thing is inflation encourages more spending - why save money when it just disappears...
It seems rates are managed by the Treasury even if there is no evidenxe supporting the thesis. Everything is pointing towards 150bps higher in long yields but at certain levels there’s always an invisible hand preventing the fall.
Why don't Japan or UK manage their rates? And if they are not, then should they attract flows? Its a bit odd
In theory since JGBs are mostly held by domestic investors it should be easier for Japan to manage rates vs Usa.
In theory yes... but the market is consistently telling the BOJ to raise rates which it then ignores...
In Japan, rates are largely a function of large international flows right? Makes it harder to set rates the way they're done in the US.
Um no - until recently there were no international flows at all. I remember the Japanese making it hard for me to buy JGBs....
I don't have any personal experience but as an economist you tend to read about the yen bouncing around due to the carry trade unwinding and stuff