Source: Fortune.com
Summary
The US Treasury bond market is showing signs of stress as the war with Iran continues, with weak demand for Treasury securities and rising yields. The cost of the war is worsening the debt picture, with the Pentagon seeking $200 billion from Congress. Investors are concerned about the unsustainable American fiscal position, rising inflation risk, and growing uncertainty about the war. The MOVE index, which tracks volatility in the Treasury market, has spiked to levels consistent with price instability and policy dysfunction.
Our Reading
The numbers tell one story. The US Treasury bond market is finally responding to the Mideast war, giving its assessment of the energy shock’s severity and the war’s effect on US fiscal imbalance and inflation. The yield curve is under pressure, with soaring oil prices boosting the inflation outlook and putting additional rate cuts from the Federal Reserve on hold. The cost of the war is worsening the debt picture, with the Pentagon seeking $200 billion from Congress. The bond market remains undefeated.
Author: Evan Null
