The 10-year U.S. Treasury yield climbed to the highest level in about 10 months, leading Bill Gross at Janus Henderson Group to declare a bond bear market just as a deluge of debt sales began.
The benchmark U.S. yield rose seven basis points on Tuesday to top 2.55 percent for the first time since March, and the Treasury curve steepened the most in over a year, as a looming glut of bond supply from the U.S., the U.K., Japan and Germany coincided with a surprise cut in purchases of long-dated Japanese government bonds by the Bank of Japan. The securities steadied on Wednesday.
Add to that rising market expectations around inflation, and traders are starting to wager that Treasuries are on the verge of a big breakout from their tightest range in a half-century.
?We?re seeing a lot of overseas buyers who would come in every time we?d have a move close to these levels who aren?t coming in anymore,? said Michael Franzese, New York-based head of fixed-income trading at MCAP LLC, a broker-dealer. ?That?s kind of scaring me a little bit. One eye is constantly on the exit button.?
?Bond bear market confirmed,? Gross said in a Twitter posting on Tuesday, noting that 25-year trend lines had been broken in five- and 10-year Treasury maturities. The billionaire fund manager at Janus said last year that 10-year yields persistently above 2.4 percent would signal a bear market, though added in an interview last week that even in such an environment, investors probably won?t lose a lot of money.
Of course, several money managers have been premature in calling the end of the three-decade bull market in Treasuries over the years.
