The bond market hasn't seen such a big move, in terms of basis points, since Donald Trump was elected.
Growing concern that the U.S. and China will remain far apart on trade differences has fed into an already anxious global bond market, worried that growth is waning in China, the rest of Asia and Europe. Trump's trade policy is not the only factor pushing yields down, but the uncertainty it has caused is a big one.yields hit a new low of negative 0.6% Wednesday and rates all over the world fell together. Reports of a 1.
"Almost every client I talk to thinks rates are going down. There are a lot of long faces and dark scenarios. Who knows if they might come to fruition?" said Michael Schumacher, director of rates at Wells Fargo. "It's been quite a run. Maybe the whole trade thing is causing people to lose confidence overall. When you think of the history of these trade deals, it's not very good.
When global rates move in tandem, the German bund can clearly be a driver for U.S. yields. Investors see U.S. Treasurys as innately more attractive, because of the depth and liquidity of the U.S.market and the fact U.S. yields have been higher, while other global benchmarks are negative. Talk in the bond market is that now, instead of yield, investors are jumping into bonds for their price appreciation and the demand is strong. "We care more about the return of our money, than the return on it," said Crescenzi.
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