Back From Vacation and What’s In My Head
Bonds want to stay above 4% and inflation is lingering at 3%, while my brain is being quantified and the Sugar Man has passed.
Bond yields are moving in the other direction.
Photographer: Cecilia del Olmo/AFP/Getty
Trying to watch the markets as disinterestedly as possible over the last two weeks, from a hammock in Mexico, one thing seemed clear. Someone somewhere was determined to break the 10-year Treasury yield, the most important number in global finance, above the level of 4%. Anthropomorphizing markets, as we’re generally not supposed to do, the yield obviously wants to go above 4%. It was also clear that very many people thought Treasuries were a buy at that level. But it does increasingly look as though the 10-year yield is getting comfortable above 4%.
To recap the story, 10-year yields went through 4% in the first week of July, in response to some second-tier data that looked strong, such as the ADP private sector employment report. It didn’t stay there for long, with the consumer price inflation data for June that suggested price rises were coming down fast spurring a large retreat.