Stocks Halt; Oil and Bonds Drop in Sync

Re:Stocks Halt; Oil and Bonds Drop in Sync by SilasX on Wednesday March 18, 2020 @02:16PM (#22619628)

>This is confusing to me too. The best explanation I've heard is that the market is expecting a future increase in bond supply (gov bond issuance to fund coronavirus mitigation measures), which would drive prices down and yields up. This future price pressure is being priced into bonds today.

Interesting! If so, maybe we could see an end to the financial markets' seemingly insatiable demand for Treasurys?

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Re:Stocks Halt; Oil and Bonds Drop in Sync by jcfrei on Wednesday March 18, 2020 @02:44PM (#22619898)

I don't know about the demand side but supply is definitely going up around the world. For the massive stimulus packages in the US and Europe lots of new bonds will be issued by governments. Additionally lots of companies around the world are drawing on their credit lines which means banks need to reduce their treasury holdings for USD. The only question that seems to matter is how high will central banks allow yields to rise?

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Re:Stocks Halt; Oil and Bonds Drop in Sync by manic85 on Wednesday March 18, 2020 @02:42PM (#22619880)

Hard to say right now, but it's likely that bonds won't go up again until people believe the rate of new bond issuances will go down.

On another note, the federal funds rate is at zero but bank stocks are cratering anyway, possibly because Trump announced there will be no foreclosures/evictions through April. So landlords and homeowners have no incentive to pay their mortgages for a couple months, which will definitely hurt banks.

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