Expert views
Commentary submitted by Bryn Jones in their own words.
Back to profileGovernment bond markets under strain
The pressure was not confined to the US Government bond markets.
Tinkering with treasuries calms bond and equity markets
Bond markets have calmed and the yield curve has flattened, largely driven by action from the US Treasury. Yesterday, it stepped in by doubling the size of its liquidity-support buybacks for longer-dated coupon securities, targeting the 10–20 year and 20–30 year sectors. The objective is not quantitative easing or additional monetary stimulus, but rather to improve market liquidity and functioning in areas of the Treasury market that have recently faced significant selling pressure and weaker investor demand. The move also signals that policymakers are increasingly uncomfortable with the pace of the recent rise in long-end yields.
Surging energy prices push inflation up to highest level since March
UK CPI rose 0.3 per cent month-on-month in July, in line with expectations, taking the annual rate to 2.9 per cent from 2.6 per cent. RPI was softer than forecast at 0.6 per cent on the month versus 0.8 per cent expected, with the annual rate at 3.2 per cent.
Yield levels becoming increasingly difficult for long-term investors to ignore
Pension funds, insurers, and other liability-driven investors may begin to view these levels as attractive entry points.
Middle East and rising oil prices are running the show in the rates markets
With no deal emerging to reopen the Strait of Hormuz, Brent rose to $87 overnight.
Markets unstable while gilt and US Treasury yields rise
The one certainty is continued uncertainty, driven by Trump’s constant back and forth, which creates erratic behaviour from the markets.
No end to Iran war in sight as Federal Reserve leaves interest rate unchanged
Iran is also suffering a severe economic shock.
Tensions flare in Middle East and AI sell off continues
Oil prices are heading south again. The main driver sending yields lower yesterday was more of the same this week for rates markets. A healthy open for gilts, an attempt to sell off, and rally into end of day.
Energy independence becoming key for Europe
By doubling electrification to 46 per cent by 2040, the EU could save well over €250 billion annually on fossil fuel imports.
Oil prices fall back sharply on renewed Iran war ceasefire hopes
Big news overnight is the big fall in oil prices with potential ceasefire. Oil is now well below $100 dollars a barrel.