Surge In Bund, Treasury Yields Sparks Slump In Negative-Yielding Debt Worldwide

As many Americans take a day off from bidding up penny stocks, the global bond market is taking a rather serious bath.

German bund yields are up 5bps this morning to -37bps, the highest yield since June 2020…

Source: Bloomberg

And US Treasury futures were monkey-hammered overnight, with the Long Bond down a point, implying a jump of around 4-5bps in the 30Y Yield to 2.05%…

Source: Bloomberg

Ultra futs are down almost 15% since August…

Source: Bloomberg

The surge in yields has sent the global volume of negative-yielding debt back down from almost $19 trillion to below $16 trillion…

Source: Bloomberg

But still – that’s $16 trillion worth of farcical paper floating around looking for the next bagholder.

Interestingly, as global bond yields have surged, the aggregate net speculative positioning across US Treasury futures has shrunk (and i snow at its least short since April 2018)…

Source: Bloomberg

So what happens next? In an ironic twist, DoubleLine has offered up two lines in the sand to watch next week (1.2% in the 10Y and 2.0% in the 30Y)…

Jeff Mayberry: “As we like to say at DoubleLine, we need two consecutive closes to confirm the level. When the markets re-open Tuesday, we’ll see whether those 1.2 and 2 percent levels hold.”#pivots #support #UST #rates #inflation

Listen:https://t.co/83kCTu4AkJ pic.twitter.com/R1fhm1pBVj

— DoubleLine || Monday Morning Minutes (@DLineMinutes) February 15, 2021

The big question is – will The Fed allow it? Or on the other hand, will investors re-allocate away from ‘expensive’ stocks to ‘cheap’ bonds?

Source: Bloomberg