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The long -term returns of the finance ministries jumped this week and flew in view of the interest reduction of the Federal Reserve, since bond investors did not receive the assurances they applied for.
The 10-year-old treasury The return rose after 4.145% after this week fell shortly below 4%. The 30-year-old treasury Rendite – closely followed by the connection to domestic mortgages – acted by 4.76% at a low point of 4.604% at the beginning of the week.
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10-year financial return, 1 month
The FED lowered its benchmark credit rate by a quarter of a percentage point to 4.00% -4.25% at the end of its session on Wednesday and prompted investors to send shares to the recording of heights when they cheered the first reduction in installments of the year. According to Peter Boockvar, Chief Investment Officer, at a time BFG Wealth Partners, bond dealers saw themselves as an opportunity to “sell” the messages according to the latest bonds.
Dealers of longer bonds “don’t want the Fed to reduce interest rates,” said Bockvar.
The sale of long -term bonds dropped the price and increased the return. Prices and returns for bonds move in the opposite direction.
The inflation of the central bank “Eye,” said Boockvar, an important risk of securities at a time at a time when inflation runs over the 2% goal of the Fed and the economy looks stable. Updated economic projections of the Fed published on Wednesday showed that political decision -makers recorded somewhat faster inflation next year.
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30-year financial return, 1 month
Investors searched for the FED to shift their focus from combating inflation until the labor market increased after weak employment data at the beginning of this month. The chairman of Fed, Jerome Powell, called on “risk management” relief on Wednesday and pointed out the soft labor market.
“The bond market when [longer yields] Further, higher, a message would send that “we do not believe that you should share interest rates aggressively, with inflation being 3%,” said Bockvar.
In addition, Boockvar said that higher yields came this week this week after longer bond prices had increased steadily in the past few months and the earnings had been lower. It was a similar step as it was seen after the Fed’s interest rate in September last year, he noticed.
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10-year financial return, 6 months
But Bockvar said it was noteworthy that the 10-year note return has hardly changed compared to the early 2024, although the Fed cuts have been cut several times since then.
An increase in long-term earnings can have an impact on mortgage loans on big ticket purchases such as houses and cars as well as credit card costs. The mortgage interest rates rose after the Fed interest rate this week after reaching a low of three years in front of the central bank.
Housekeeper Lennar On Thursday, the Wall Street sales expectations missed in the third quarter and gave weak instructions for deliveries in the current quarter. In a statement, Co-CEO Stuart Miller said that Lennar in Miami was exposed to a large part of the third quarter in Miami on today’s real estate market “continued pressure” and “increased” interest rates.
Looking for “terrible news”
While the stock market can move significantly in an interest rate reduction, connection investors try to make decisions based on what it sees as the overall picture, according to Chris Rupkey, Chief Economist at FWDBonds.
“It’s not the journey, it’s the goal,” he said. This can be determined by the forecasts of the Central Bank for future interest reductions and the perceived neutral interest rate for the Fed Fund interest rate.
“You try to judge: What’s the final in it?” Said Rupkey. “The bond market will really react as soon as it is certain that the central bank will dramatically reduce interest rates.”
One point from Bockvar said that long-term US income can also influence their international colleagues who are also higher, which makes it decisive to pursue the economic developments and movements of foreign central banks overseas.
Nevertheless, investors should be careful what they want when it comes to long -dated returns, Rupkey warned.
The decline returns often signal a recession on the horizon, said the economist. In fact, Rupkey has attributed the return this week to falling unemployment applications, which shortly indicate a lesser risk of economic downturn.
“Don’t be so happy that you reduce bond income, because it can mean that it is impossible for you to find work,” said Ruppkey.
“Unfortunately, the bond market only includes bad news,” he added. And unfortunately “not only bad news … terrible news.”
– Fred Imbert and Diana Olick from CNBC contributed to this report.
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