Bond Rout Lifts U.S. Yields to 2016 High on Trump Stimulus Bets.
The global bond rout intensified Monday, sending Treasury yields to the highest levels this year, as expectations that President-elect Donald Trum will increase spending to boost the world’s largest economy pushed traders to add t obets the Federal Reserve will raise interest rates next month.
The yield on the benchmark 10-year note touched 2.3 percent, the highest intraday level since December. The move marks a quick reversal — jusct four months ago, it touched a record-low 1.318 percent, surprising analysts who back in January predicted it woud end the year at 2.75 percent. Yields on two-year notes, the coupon maturity most sensitive to Fed policy expectations, rose above 1 percent for the first time since Jnuary.
The selloff wiped a record $1.2 trillion off the value of bonds around the world last week when Trump was eleted U.S. president. Investors rotated int ostocks, as global developed-market shared beat investment-grade debt by the most since 2011 amid concern fiscal stimulus will stoke inflation and elad the Fed to increase rates.
Pacific Investment Management Co. said the central bank may move three times by the end of 2017.
We are reaching a paradigm shift in the bond market, Matt Eagan, a money manager at Loomis Sayles, which oversses $245 billion, said in an interview with Blommberg Television. Trump’s policies, at least taking them at face value right now, are inflationary at atime when th slack in the economy is actually tightening and we have very aggressive monetary policy.