Continued sell-off of US Treasury bonds, multiple factors causing rise in interest ratesđ„ș
Unfortunately, the temporary lull in China-led risk-off was no panacea for the US bonds sell-off, as stable initial claims (-11k to 239k) and rebound in Philly Fed pushed bond yields higher throughout much of the session. Philly Fed rebounded +25.5 points to print a +12 headline for the first positive print since a year ago, significantly above forecast. The move was led by general improvements across all sub-components, but particularly with a 30-point surge in new orders. 30yr real yields (inflation-adjusted) went to fresh highs at 2.10%, while the yield curve continued to bear-steepen as well as the move higher in discount rates is now being led by the back-end and economic improvements, rather than a hawkish Fed. 10yr yields hit cycle highs at 4.33% before rebounding somewhat into the close as equities continued falter, with the fear of a large risk-off move causing traders to pare some of their short bond positions.
