Mar 13, 2019

Bond traders have no faith in long-term U.S. growth or inflation

Data: Investing.com; Chart: Axios Visuals

U.S. Treasury yields fell to their lowest level in about 10 weeks on Tuesday, as investors continue to buy safe-haven government debt even as the U.S. stock market rises.

Why it matters: While the S&P 500 has risen more than 11% so far this year, benchmark 10-year Treasury yields are back near their lowest levels of 2019. Despite those low yields, a Treasury auction of 10-year notes Tuesday saw especially strong demand.

  • Treasury yields had started to pick up after the delayed Q4 GDP report suggested prices could be picking up, but bond investors have lost faith and Tuesday's weak core CPI data (1.5% year-over-year and the first month-over-month reading below 0.2% in 6 months) closed the coffin on any further upward momentum.

The big picture: As we wrote last month, the bond market is showing that traders have no faith in long-term U.S. growth or inflation. Stocks are rallying based on expectations that the Fed will not raise interest rates, a theme that has been re-enforced by worsening global growth data.

  • John Herrmann, rates strategist at MUFG Securities Americas, tells Reuters that his bank's models suggested the Fed will hold rates through this summer and then shift to an easing monetary policy stance at its September meeting.

Go deeper

Coronavirus kills 2 Diamond Princess passengers and South Korea sees first death

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. U.S. numbers include Americans extracted from Princess Cruise ship.

Two elderly Diamond Princess passengers have been killed by the novel coronavirus — the first deaths confirmed among the more than 600 infected aboard the cruise ship. South Korea also announced its first death Thursday.

The big picture: COVID-19 has now killed more than 2,200 people and infected over 75,465 others, mostly in mainland China, where the National Health Commission announced 118 new deaths since Thursday.

Go deeperArrowUpdated 6 hours ago - Health

SoftBank to cut its stake to get T-Mobile's Sprint deal done

Illustration: Rebecca Zisser/Axios

T-Mobile and Sprint announced a revised merger agreement that will see SoftBank getting a smaller share of the combined company, while most shareholders will receive the previously agreed upon exchange rate. The companies said they hope to get the deal as early as April 1.

Why it matters: The amended deal reflects the decline in Sprint's business, while leaving most shareholders' stake intact and removing another hurdle to the deal's closure.