What's going on with bond yields lately?
We are likely seeing the final flush of the most important pain trade in recent history.
Disclaimer: The information contained in this article is not and should not be construed as investment advice. This is my investing journey and I simply share what I do and why I do that for educational and entertainment purposes.
TLDR Summary
The recent surge in Treasury yields is unusual because its beginning coincided with the first rate cuts. When the Federal Reserve manipulates overnight rates, they usually influence longer tenors of the yield curve as well. Historically, the rate-change beta of the 10-Year is about 0.5, meaning that 100bps worth of rate cuts typically lower the 10-Year by 50 bps. Over the last three months, we have seen precisely the opposite. As the Fed cut 100 bps, the 10-Year surged by almost the same amount.