Markets

Bill Gross calls bond bear market as 10-year Treasury yields 2.55%

Bill Gross calls bond bear market as 10-year Treasury yields 2.55%

A possible slow-down or halt to China purchasing U.S. Treasury yields could have significant repercussions, ONADA said in a note.

"All of last year there was this fantastic correlation between US 10-year yields and dollar-yen and people put on what is known as pairs trades", said Greg Anderson, global head of FX strategy at BMO Capital Markets in NY.

So, how should investors position themselves if we are expecting this kind of price action across the bond market?

Bank stocks were boosted on Tuesday by rising U.S. Treasury 10-year yields.

Germany's 10-year bond yield hit its highest level since the October European Central Bank meeting when policymakers first announced the extension of its bond-buying scheme, with one trader citing heavy supply as the latest trigger for the move.

Reduced asset purchases by the world's top central banks, rising commodity prices and looming USA debt sales all support the case for higher bond yields.

The dollar had slumped as the Bank of Japan's move to trim its purchases of long-dated government bonds (JGB) this week reverberated across currency markets.

Following the market's movement, bond veteran Gross, who is portfolio manager of the Janus Henderson Global Unconstrained Bond and Total Return strategies and a member of the global macro fixed income leadership team, took to Twitter on Tuesday to say "bond bear market confirmed".

Think about it this way: As prices in the 30-year rise, the yields in the 30-year will sink.




China's latest statements come after the Trump administration helped pass the most extensive rewrite of the US tax code in more than 30 years - a bill that could reduce federal revenue by as much as $1.5 trillion over 10 years.

Against a basket of six major currencies.DXY, the dollar was down 0.23 percent. The Ministry of Finance offered 2.3 trillion yen ($20.47 billion) of 10-year JGBs with a 0.10 percent coupon, and some 65.5523 percent of the bids were accepted at the lowest price of 100.20.

Major government bond yields extended earlier gains after the report.

While the central bank's move in the previous session was a technical tweak in line with its policies to date, it triggered market speculation that the BOJ could be poised to begin winding down its massive stimulus. US gold futures GCv1 for February delivery settled up $5.60, or 0.4 percent, at $1,319.30 per ounce.

Low interest rates, of course, have been a big driver of the stock market rally the past nine years and has also provided a lift to the economy, as middle-class Americans have benefited from lower borrowing costs.

Platinum XPT= was up 0.9 percent at $973.60 an ounce, after hitting a almost four-month high of $973.90. The British pound fell 0.2% to $1.3515, the weakest in more than a week.

The MSCI world equity index, which tracks shares in 47 countries, was up 0.1 percent.

Asian shares flinched from testing their 2007 record peak as investors booked profits in high-tech shares.

Japan's Nikkei .N225 also shed 0.3 percent, slipping from 26-year highs hit the day before.