The bond market effectively closed around noon today, happy to have survived an interesting week. Equities are enjoying an excellent run into the close, but interest rates can wait to see if those gains hold next week. There was minor disappointment to the flash report for PMI-services this morning, but both equity and fixed income traders recovered quickly.
The ECB briefly reminded the investment world Thursday the Fed is not the only central bank in the world. One reason for calmer trading in 10-yr and 5-yr UST at the end of the week was the slow and steady, dovish message from Chair Lagarde and her team. With the ECB as cautious (or more cautious) than Chair Powell and crew, expect more global interest in Treasuries any time rates move suddenly higher. The first article looks at the influence of overseas buying at recent auctions as well as structural reasons Treasuries remain attractive to non-US accounts even as nominal yields remain low.
Until this month, it was easy to forget how pervasive the pandemic is for economies and financial markets. Given the scourge of the Delta variant here and abroad, the second article bemoans the slow pace of vaccination in the US and the sourer outlook for a world “without COVID.” Meanwhile, the broad trend of COVID-19 outside the US is much worse, seemingly in a never ending spiral of increasing infections