After the breakout in global bond yields last Friday, they continued higher on Monday, albeit more modestly. It started in Japan, writes Peter Boockvar, editor of The Boock Report.
Yields there moved up again, particularly at the longer end of their curve with the 30-year yield up another 6 basis points to 4.10% and the 40-year yield higher by 9 bps to 4.34%.
There is evidence that excessive debts and deficits now matter as one of the factors leading to higher yields. The move up Monday was in response to talk that the Takaichi government was going to ask for a supplementary budget to cover the extra subsidies for its people to cushion the blow of higher commodity costs, particularly energy. This would entail more bond issuance.
Meanwhile, the Citi Panic/Euphoria index is now very euphoric – with the gauge at 0.82, double the 0.41 “Euphoria” threshold. I had to go back to 2021 to find a reading above that. Still, assume this was taken before Friday’s selloff – and be aware of one’s sentiment surroundings.
