How quickly things change.
Just nine short months ago, in May 2020, the market did something it had never done before: it pushed Fed Fund futures for January 2021 negative, meaning that last spring bond traders were betting that sometime around today, overnight rates in the US would be negative as the US economy entered the final stretch of its Japanification implosion.
Since then things haven’t quite worked out as expected, with long rates rising sharply and the 30Y today briefly breaching 2% for the first time since February 2020, on the back of surging breakeven rate, which rose by 1bp point to touch 2.21%, eclipsing a 2018 high of 2.2078%, and rising to the highest level since 2014 as markets increasingly price in far higher inflation over the next decade.
Categories: News
