Thursday, Jun 14, 2007
Views of the future
Guardian: US bonds are following, not pointing the way
The piece of news that has been lost amid the excitement about bond yields is that the US sub-prime housing market seems to be getting worse, not better. It's a reminder that rising interest rates usually cause pain in the end.
Posted by inbreda @ 02:36 PM (169 views) Add Comment
2 Comments
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1. royston said...
US bond market underreaction in recent years is easy to explain:- too much money looking for a home. Risky assets were being overbought. It's running out of steam now and prices are starting to reflect fundamentals - i.e. lower prices and higher yields.
2. confused76 said...
10-yr Treasuries is not about pricing risk but pricing inflation expectations. So higher yields is actually better news, in a way
Royston, it is also true that risk is being repriced and is becoming more expensive as shown by the risk spreads of commercial paper, investm grade bonds, junk b etc
for borrowers, both the above news are actually like a slow death sentence, if you know what i mean