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Here's what it might take for the 10-year yield go to 5%
  + stars: | 2023-09-26 | by ( Bob Pisani | ) www.cnbc.com   time to read: +2 min
Can the 10-year yield go to 5%? The primary factor that would move the 10-year towards 5%, Braizinha says, is a reacceleration of the economy. A soft landing (still growth, but with lower inflation) won't do it. Braizinha notes that the soft landing is still his base case and would "push back" against a 5% 10-year yield. He also notes that "the degree of conviction" around a stronger economy "seems to have deteriorated."
Persons: Bruno Braizinha, Braizinha, Braizhina Organizations: Bank of America Locations: U.S
Treasury yields are spiking to levels not seen in over 15 years, causing sell-offs in many of the market's biggest bond funds. The iShares 20+ Year Treasury Bond ETF (TLT) closed at $89.18 on Monday, which was its lowest close since Feb. 10, 2011, according to FactSet. The Fed's target interest rate is already above 5%, as are short-term Treasury yields. But the long-term decline in bond yields began roughly two decades before that. That trend may finally have reached its turning point, Jim Grant, founder of Grant's Interest Rate Observer, said Tuesday on CNBC's " Squawk Box ."
Persons: Bruno Braizinha, Braizinha, Goldman Sachs, Cecilia Mariotti, Mariotti, Ajay Rajadhyaksha, Jonathan Krinsky, Jim Grant, Grant, BTIG's Krinsky Organizations: Treasury Bond ETF, iShares, Aggregate Bond, Treasury, Bank of America, Barclays, Federal
The rally comes after Treasuries notched the worst year in their history following the Fed's most aggressive monetary policy tightening since the 1980s. Some equity investors are nevertheless playing it safe, expecting the current rally in stocks to wilt if a recession hits. For now, many investors are wedded to a more dovish view, betting that policymakers will blink if growth starts to slow. "The Fed is closer to the end than the beginning, and rates usually fall across the curve when the Fed is finished raising rates." Of course, some investors are happy to take the central bank at its word and are betting rates stay higher for longer.
A surprise announcement from the Bank of Japan sent investors spinning and global markets reeling on Tuesday. The country’s central bank signaled that it would reverse two decades of policy precedent and begin to move away from loose monetary policy intended to keep wages and prices high. The Japanese Central Bank loosened the yield on its 10-year government bonds from 0.25% to 0.5%. The central bank said that inflation expectations have risen. Japan’s is the last major central bank to keep rates negative and this signals that it could be shifting its stance.
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