Investors see no let-up in bond market strain - Reuters

<a href="https://news.google.com/rss/articles/CBMikAFBVV95cUxQOUhKUHJDSGF3VEdSMGVrQ093WTMySXE3YTJFRVA4OWtXalJOS0dNRnhYSVFNbXZYdjh6R2ZXNDRobjN4N0ZrbGtGM0tvSkhvNWR6eG9qYWlaNlh5cWgyNXNiVVRsV0Rha2pXU0R6MjRIUGJBc1JmcEx1NXVPaC1BdWphMWx4Zk5mTHdzMnVWekI?oc=5" target="_blank">Investors see no let-up in bond market strain</a>&nbsp;&nbsp;<font color="#6f6f6f">Reuters</font>

A new era of elevated borrowing costs is potentially underway as war-driven inflation angst intensifies in the US bond market, sending 30-year yields toward a two-decade high above 5%.

Investors are fleeing government bonds after back-to-back US inflation reports this week showed mounting price pressures, sending benchmark interest rates to the highest levels in nearly a year.

Government bond markets tumbled around the world, sending yields surging from Japan to the US on intensifying fears that the war-driven price shock will force central banks to raise interest rates to contain the impact.

A global surge in yields is threatening to cause a disruption in the Treasury futures market — the principal tool for hedging US government bonds — as traders stand to overhaul their positions.

Credit investors enticed by high yields are buying up corporate bonds, shrugging off the lingering Middle East conflict and focusing instead on robust results from blue-chip businesses.

The Federal Reserve needs to catch up with bond markets or risk losing control of borrowing costs as investors grow increasingly worried about inflation, according to Yardeni Research.

Bond market participants widely see the US Treasury refraining from any major shift in debt-issuance plans in a key statement Wednesday, though the Trump administration’s aggressive financial maneuvers elsewhere have put investors on watch for any surprise move to hold down yields.

A New York Fed index on Wednesday signaled that the US corporate bond market saw more dislocations in March, with the high-grade bond market more bruised than its high-yield counterpart.

The jump in the oil price today has “exacerbated fears about a stagflationary shock” and pushed global bond yields even higher this morning, says Jim Reid of Deutsche Bank.