Rick Santelli on Bond Market Trends: Long End Leads to Lower Yields

Bond Market Performance

• 📉 The long end of the bond market is leading the way to lower yields, a phenomenon known as a bull flattener.
• 📈 This means bond prices are increasing while yields are decreasing, causing the yield curve to flatten.
• 📊 The spread between the 2-year and 10-year Treasury yields is currently hovering around 47 basis points, down from over 60 basis points when long-end rates were rising.

Economic Data Impact

• ⚠️ Durable goods orders came in weaker than expected, particularly the headline number.
• 📦 While stripping out transportation showed a slight improvement, capital goods orders (a proxy for business spending) were also weak.
• 🗓️ This weakness in capital spending has been observed over the last few months, with particular attention paid to data since October of last year.

International Bond Markets

• 🌍 The 30-year bond market, especially in Japan and the UK, is experiencing significant movement.
• 🇯🇵 In Japan, 30-year yields have risen substantially, leading to questions about the long-term effects of controlling interest rates.
• 📈 The surge in yields internationally suggests a broader trend impacting long-term debt instruments globally.