INSUBCONTINENT EXCLUSIVE:
Investors are about to absorb $131 billion of Treasury note auctions at the lowest yields in months, after they piled into US debt following
a dovish Federal Reserve decision and fresh signs that global growth is weakening.
The week kicks off with a closely watched segment of the
US yield curve foreshadowing a recession: The gap between 3-month and 10-year rates is now negative
In the leadup to the economic downturn that began late in 2007, this part of the curve initially flipped to inverted in early 2006
makers unexpectedly scaled back projected rate hikes this year to zero
the data this week that are leading indicators, like housing starts, to see if the economy is actually faltering.
Bond investors seem to be
leaning in that direction, even as the labor market is the tightest in decades
The benchmark 10-year note yields 2.44 per cent, close to its lowest since January 2018
Giddis sees it ending the year at 2.25 per cent.
Money-market traders are also ramping up bets that a rate cut is coming, even as policy
makers still have their next move penciled in as a hike in 2020
Fed funds futures show traders see about an 80% chance of a quarter-point easing this year, up from about 30 per cent early last week.
While
this latest market signal.
Michael Kushma, chief investment officer for global fixed income at Morgan Stanley Investment Management, says
And increased bill supply is elevating short-end rates, he said.
The demand for new Treasuries with 2-, 5- and 7-year maturities may get a
lift from tumbling yields worldwide
