Rounding Up the Usual Suspects After a New Low
Markets were supposed to have hit their bottom last October. Yet here we are again, with nowhere to hide. Now what?
Lineup of the low: Oil, US shutdown, derivatives, the Fed, and the one you don’t see until too late.
Photograph: The Usual Suspects/Gramercy Pictures/Moviepix/Getty
To get John Authers' newsletter delivered directly to your inbox, sign up here.
In October last year, as the Federal Reserve hinted that the pace of rate hikes would soon slow, it looked as though the low was in. The 10-year Treasury yield peaked at 4.5% and began to fall, bringing many other markets up. China’s surprising decision soon after to end its Covid-Zero restrictions much earlier than had been generally expected added fuel to the incipient recovery. In March, it looked as though October had been confirmed as the peak of the 10-year Treasury yield — or so many calculated — when a renewed surge above 4.2% precipitated a series of regional bank failures in the US and the fire sale of Credit Suisse. That prompted the Fed into making ample liquidity available, and that in turn led to lower bond yields. The worst, it appeared, was over.