Treasury Curve Inversion Deepens as Yields Jump and Then Plunge
Benjamin Purvis and Michael MacKenzie
·2 min read
The gap between 2-year and 10-year Treasury yields shifted to a fresh
extreme, with the longer rate dropping to be as much as 38 basis below
the longer benchmark. That level on the widely watched yield curve
metric, seen by many as a potential harbinger of recession, hasn’t been
seen since 2000.
The benchmark 10-year rate climbed as much as 10
basis points to 2.85% during the US morning, while shorter-dated yields
rose even more as traders briefly moved to price in the potential for a
75-basis-point Fed hike next month at around 1-in-2. By late in the US
afternoon though, short-end yields were close to where they ended the
prior day, while longer end rates were falling, with the 10-year ending
around 2.70%. The slide weighed on the greenback, with the Bloomberg
dollar index down marginally for the day after being up close to 0.4% at
one stage during the session.
“Yields rose to levels that looked
attractive and the buyers started with the back end and it feels like
cash was being put to work in fixed income,” said George Goncalves, head
of US macro strategy at MUFG. “There is no sense of a catalyst, but the
fact the market can’t hold higher rates suggests there is some
skepticism among investors that the Fed will not really deliver on its
tough talk.”
A cavalcade of comments by Fed officials and
stronger-than-expected data on the US services sector helped drive the
earlier move up in yields, while US stocks also advanced for the day.
The moves are just the latest in a long line of intraday reversals
seen in the market recently. With uncertainty over growth, inflation and
central bank policy having picked up, there has been an increase in
daily moves of this scale over recent months and a concomitant pickup in
various volatility measures.
Yet even with the pullback late
Wednesday, rates on key benchmarks remain above the levels they were at
as recently as Monday, with much of the enormous surge in yields seen
Tuesday still being maintained.
Feb 5, 2021 · For a few short hours from Thursday afternoon to Friday morning, Larry Summers seemed to be on the verge of blowing up another big stimulus.
2 days ago · Former Treasury Secretary Larry Summers gave a recession probability 3-in-4 odds. "We essentially don't have soft landings from high rates
Venture capitalist and author Blake Masters is running against a competitive Republican primary field, and the winner will face Democrat Senator Mark Kelly ...
In the spring of 2012, Blake
Masters, who was in his final year at Stanford Law, sat in on a computer
science class taught by Peter Thiel, the billionaire co-founder of
PayPal. During a lecture titled “Founder as Victim, Founder as God,”
Thiel argued a kinglike leader was essential to innovation. “A startup
is basically structured as a monarchy,” he explained. “We don’t call it
that, of course. That would seem weirdly outdated, and anything that’s
not democracy makes people uncomfortable.”
You can also listen to Noah Lanard's story read aloud:
Afterward, Masters tweeted that the lecture was the best 90 minutes he’d ever spent in a classroom and linked to the exhaustive notes he’d been taking on Thiel’s course. For months, everyone from tech bros to New York Times
columnist David Brooks headed to Masters’ Tumblr to read them. It was
heady stuff for a CrossFit-obsessed libertarian described by a law
school classmate as being “notable for not being notable.” RELATED
16 hours ago · Arizona Republican Blake Masters is polling ahead of his nearest GOP rival by double digits in that state's Senate primary on Tuesday, ...
Step lively! Ramp down and it's prime time to RAMP-UP The Rhetoric
ADVERTISEMENT
Click to copy
US House Speaker Pelosi arrives in Taiwan, defying Beijing
TAIPEI, Taiwan (AP) —
U.S. House Speaker Nancy Pelosi arrived in Taiwan late Tuesday,
becoming the highest-ranking American official in 25 years to visit the
self-ruled island claimed by China, which quickly announced that it
would conduct military maneuvers in retaliation for her presence.
Pelosi
flew in aboard a U.S. Air Force passenger jet and was greeted on the
tarmac at Taipei’s international airport by Taiwan’s foreign minister
and other Taiwanese and American officials. She posed for photos before
her motorcade whisked her unseen into the parking garage of a hotel.
Her visit ratcheted up tension
between China and the United States because China claims Taiwan as part
of its territory, and it views visits by foreign government officials
as recognition of the island’s sovereignty.
The Biden
administration, and Pelosi, say the United States remains committed to
the so-called one-China policy, which recognizes Beijing but allows
informal relations and defense ties with Taipei.
The
speaker framed the trip as part of a broader mission at a time when
“the world faces a choice between autocracy and democracy.” Her visit
comes after she led a congressional delegation to the Ukrainian capital
of Kyiv in the spring, and it serves as a capstone to her many years of
promoting democracy abroad.
“We
must stand by Taiwan,” she said in an opinion piece published by The
Washington Post on her arrival in Taiwan. She cited the commitment that
the U.S. made to a democratic Taiwan under a 1979 law.
“It is essential that America and our allies make clear that we never give in to autocrats,” she wrote.
Taiwan
and China split during a civil war in 1949, but China claims the island
as its own territory and has not ruled out using military force to take
it.
The Biden
administration did not explicitly urge Pelosi to call off her plans. It
repeatedly and publicly assured Beijing that the visit did not signal
any change in U.S. policy toward Taiwan.
Soon
after Pelosi’s arrival, China announced a series of military operations
and drills, which followed promises of “resolute and strong measures”
if Pelosi went through with her visit.
The
People’s Liberation Army said the maneuvers would take place in the
waters and skies near Taiwan and include the firing of long-range
ammunition in the Taiwan Strait.
“This
action is a solemn deterrent against the recent major escalation of the
negative actions of the United States on the Taiwan issue, and a
serious warning to the ‘Taiwan independence’ forces seeking
‘independence.’”
China’s
official Xinhua News said the army planned to conduct live-fire drills
from Aug. 4 to Aug. 7 across multiple locations. An image released by
the news agency indicated that the drills were to take place in six
different areas in the waters surrounding Taiwan.
Chinese Foreign Minister Wang Yi said Washington’s betrayal “on the Taiwan issue is bankrupting its national credibility.”
ADVERTISEMENT
“Some
American politicians are playing with fire on the issue of Taiwan,”
Wang said in a statement that referred to the U.S. as “the world’s
biggest saboteur of peace.”
Back
in the United States, 26 Republican lawmakers issued a statement of
rare bipartisan support for the Democratic speaker. The statement called
trips by members of Congress to Taiwan routine.
Senate
Republican Leader Mitch McConnell backed Pelosi’s visit as a display of
support for Taiwan’s democracy and said any allegations that her
itinerary was provocative were “utterly absurd.”
“I believe she has every right to go,” McConnell said in a Senate speech.
Senators
are considering legislation to bolster Taiwan’s defense as direct
response to China’s rhetoric. The Taiwan Policy Act, which has support
from both parties, will be discussed Wednesday by the Senate Foreign
Relations Committee.
ADVERTISEMENT
The
package would bolster Taiwan’s defense capabilities with nearly $4.5
billion in security assistance over the next four years and provide
other support for Taiwan’s democratic government and civil society. The
measure would also designate Taiwan as a “major non-NATO ally,” which
opens the door to more security and trade benefits.
Backers call it the most comprehensive restructuring of U.S. policy toward Taiwan since the Taiwan Relations Act of 1979.
Pelosi’s trip was not officially announced ahead of time.
Barricades
were erected outside the Grand Hyatt Hotel in Taipei. Journalists and
onlookers thronged the streets just outside and pressed against the
hotel’s lobby windows as they awaited Pelosi’s motorcade. Two buildings
in the capital lit up LED displays with words of welcome, including the
iconic Taipei 101 building, which said “Welcome to Taiwan, Speaker
Pelosi.”
China
has stepped up overflights and other provocative moves toward Taiwan and
neighboring territory in recent years, asserting broad claims of its
rights around the region.
China’s
military threats have driven concerns about a new crisis in the
100-mile-wide (140-kilometer) Taiwan Strait that could roil global
markets and supply chains.
The White House insisted that China had no valid cause for anger.
“The
United States will not seek, and does not want, a crisis,” John Kirby,
spokesman for the National Security Council, told a White House briefing
Tuesday. “At the same time, we will not engage in saber-rattling.”
U.S.
officials have said the American military will increase its movements
in the Indo-Pacific region during Pelosi’s visit. The aircraft carrier
USS Ronald Reagan and its strike group were in the Philippine Sea on
Monday, according to officials who spoke on condition of anonymity to
discuss military operations.
The
Reagan, the cruiser USS Antietam and the destroyer USS Higgins left
Singapore after a port visit and moved north to their home port in
Japan.
Meanwhile,
Taiwan’s Defense Ministry said early Wednesday that China had sent 21
planes flying toward Taiwan, 18 of them fighter jets. The rest included
an early warning plane and an electronic warfare plane.
Beijing
sees official American contact with Taiwan as encouragement to make the
island’s decades-old de facto independence permanent, a step U.S.
leaders say they don’t support. Pelosi, head of one of three branches of
the U.S. government, is the highest-ranking elected American official
to visit Taiwan since then-Speaker Newt Gingrich in 1997.
Pelosi’s
aircraft, an Air Force version of the Boeing 737, took a roundabout
route, flying east over Indonesia rather than directly over the South
China Sea.
The speaker has long challenged China on human rights, including traveling to Tiananmen Square in 1991, two years after China crushed a wave of democracy protests.
In
2009, she hand-delivered a letter to then-President Hu Jintao calling
for the release of political prisoners. She had sought to visit Taiwan’s
island democracy earlier this year before testing positive for
COVID-19.
China
has been steadily ratcheting up diplomatic and military pressure on
Taiwan. China cut off all contact with Taiwan’s government in 2016 after
President Tsai Ing-wen refused to endorse its claim that the island and
mainland together make up a single Chinese nation, with the communist
regime in Beijing being the sole legitimate government.
Ng
reported from Kuala Lumpur, Malaysia. Associated Press journalists Jim
Gomez in Manila, Philippines, Mari Yamaguchi in Tokyo and Zeke Miller in
Washington contributed to this report.
.jpg)
.jpg)
.jpg)
