Looking at US CPI report, China’s PPI and CPI report, and the treasury offering this week. Yield spike beginning to look more like drama.
With CPI reported in line with expectation, or slightly below within some sectors, it does indicate that inflationary pressure is likely temporary and is driven by supply and logistic disruption due to the pandemic. In addition, with China PPI reported in line or slightly higher while core CPI was also slightly under expectation, further add to the idea of a temporary inflation driven by supply-logistic disruption.
US treasury 10 year offering today went well, with over $2.7 bid per dollar offered. And foreign interest bounded back to over 58%, just slightly below high.
Its looking more and more likely that the recent yield spike is caused by dramatized media covering of the bad auction of the 7-year bills few week ago. Looking at the today and yesterday’s auction result, the demand is strong, and that’s taking into account that USD has declined about after a 8-9%.
The reality is that the giant global government bond market has no better choice. US , is practically the only one issued by developed country that still has a positive rate. So there are only 3 options: safe bonds with negative rate, risky bonds with positive rate, or US bills which is safe but dismal positive rate. The reality is that, at the moment, US bills offering is still seem as the best out of a basket of crappy choices.
Submitted March 10, 2021 at 04:47PM by sendokun https://ift.tt/3rFr8WA
