There are plenty of things going on in the economy, trade and politics at the moment that are worth watching closely but I believe the confluence of them all — and the single most important metric to watch — is the yield on long bonds.
This year we’ve seen three tests of 5% and they were all met by buyers, including early this week after the debt downgrade. But this time the buying momentum faded quickly and yields are up 5.5 bps to 5.02%. If we can close above 5% (especially on the weekly), that’s a good sign that the buyers are exhausted.
In that case, we could very quickly be talking about the 2023 high of 5.17%. That came at a time when Liz Truss was blowing up the UK economy and US inflation was out of control
Will the buyers defend 5% yields once again? The red flags are flying
