Bonds back from the brink
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Why did US Treasury yields retreat after hitting multi‑year highs?
Bond yields back from the brink. Don't you just love a little alliteration? But that's what happened today. US treasure yields reached a multi-year high, then retraced a little, even though the big, beautiful bill could add to the deficit, and that passed the house. We'll try to understand the logic there. And PMIs, not as bad as they could be. We've got better than expected results in the US, in fact. So for all the concern, no big hurt from town. Being filled yet, and lots of retail sales numbers today as well. It is the morning call from NAB for Friday, the 23rd of May, 2025. Well US stocks had bounced back today, then they lost it all right up to the closing bell. So an hour out and the Dow and the S P were up half a percent and then they both closed just in the red.
The Nasdaq was up naught point nine percent, uh now it closed uh just up naught point three percent. So whilst US stocks were sort of moving around a fair bit, stocks were well down in Europe, more than half percent off the Eurostocks fifty, the DAC. The CAC Carrot and the FTSE one hundred all at their close in Europe and bond yields have come down a little bit today, five basis points off ten-year treasuries in the US, uh just three basis points lower for thirty-year bonds. They actually climbed up to five point one five percent earlier in the sessions. So we're looking at multi-year highs, only small movements in yields in Europe. They're Aussie ten years yesterday. We're up just one basis point to four point four five percent, a couple of basis points.
Points lower than that overnight on futures. The US dollar has climbed back up a little today, up 0.3% on the DXY to ninety-nine point nine. The Aussie is down 0.4% to 64.1 US cents. Not much movement in the pound, but the Euro is down 0.4% as well, the Yen down 0.2%. And oil is down again another one percent off WTI and Brent. Brent now sixty-four twenty a barrel. Uh down.
How is the passage of the “Big Beautiful” tax bill influencing bond markets?
Down to sixty three fifty earlier on. Uh so Nabs Ken Crompton is back with me today. Uh so this move in US Treasury yields, it looks like it's stopped for now. Uh so do you think the that the treasury sell off is is over? It's interesting, isn't it? That we've seen it uh switch direction as the big beautiful bill passed the house, and yet, you know, the expectation is that This bill is gonna add to the US deficit, which you would have thought would be another reason for yields to keep on rising.
Yeah, good morning, Phil. I think um look in in the end we did get a bit of a few concessions to the Hold Out Republicans on the on the big beautiful bill, which I was surprised to learn is actually the official name. Um and you know obviously I think maybe the certainty of getting something through has been enough to to alleviate some of the the fear and panic in the market, but as well as that, um look it's not unusual in big moves for there to be a a bit of an overshoot. And I think um yeah, if we can Consider yesterday's bond auction result. That was weak, but you know, the twenty year um the the the twenty year maturity treasury note in particular, that was only reintroduced about five years ago, that has really struggled to to sort of find a a natural home amongst investors since it's been reintroduced and and has often been a source of pretty weak auction results.
Which the market usually dismisses just because old, you know, that the twenty year point, no one quite knows what to do with that yet. So we'll just sort of set that aside. You know, if a thirty year or ten year auction failed, that'd be more interesting. Obviously the confluence of events at the moment with that bill before the House. And I'm not saying dismiss that result yesterday. I mean, there is clearly um a l a lot of concern out there about about long end bonds at the moment. I mean the the JGB auction on Tuesday, which probably helped crystallise this into a bit of a bit of a global phenomenon. You know, those yields haven't retraced actually. So, you know, ten year Uh so thirty or forty year JGB's pushing onto further all time highs yesterday.
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Chapters
8 chapters
1
Why did US Treasury yields retreat after hitting multi‑year highs?
0:01–1:53
2
How is the passage of the “Big Beautiful” tax bill influencing bond markets?
1:53–4:06
3
What does the weak 20‑year Treasury auction tell us about long‑end demand?
4:06–6:17
4
Why are European PMI readings mixed and what does Germany’s slowdown mean?
6:17–8:04
5
What are the key takeaways from New Zealand’s latest budget outlook?
8:04–10:57
6
How will today’s retail‑sales data for NZ, the UK and Canada shape market sentiment?
10:57–13:06
7
What does the new US‑China trust survey reveal for global bond investors?
13:06–15:32
8
How is the RBA preparing for potential trade‑war shocks after the Lowy Institute speech?
15:32–16:56