World news – GB – Vaccine potential increases, productivity increases, plus post-election fluctuations

Hopes to end the coronavirus crisis pushed government bond yields near their multi-month highs on Monday, driven by a recent rush by traders to adjust positions after the presidential election that led to months of calm in the bond market. p>

The yield on the benchmark benchmark for 10 years U Q Treasury bills after 094%

Pfizer Inc.

PFE 1041%

And the

BioNTech SE

BNTX 1464%

They said they had jointly developed a 90% effective coronavirus vaccine, raising hopes for widespread use in the near future. The yield continues to rise on one of the rugged trips since March, which began when expectations about US results changed when elections and the prospects for fiscal stimulus sparked sharp fluctuations in Bond prices

The prospect of a vaccine-driven economic recovery could push portfolio managers to untangle the positions that piled up in recent sessions again in what could be a messy move pushing yields above 1%, according to traders and asset managers

« The risk-based response makes sense, and Treasurys are along the way, » said James Athy, Aberdeen Investment Director Standard Investments

Long-term Treasury yields, which rise when bond prices fall, help determine borrowing costs across the economy in recent months. Very low yields have led to a boom in mortgage refinancing and helped major companies cope with disruptions from the coronavirus pandemic. And it pushed up stock prices by pushing investors to search for returns in riskier assets

Yields remained under control due to lackluster economic outlook and the Fed’s efforts to stimulate the economy. Nevertheless, they began to creep in this decline in large part because investors were anticipating a strong election for Democrats that would allow them to pass trillions of dollars of new spending measures – Which could lead to an increase in the supply of bonds and raise economic growth and inflation

Driven by those bets, the yield on 10-year U Q Treasuries 0 briefly hit 94% on election night, the highest level since June and then down to 072% of traders preparing for a divided government before finally regaining strength to zero 82% on Friday – Thanks in part to the better-than-expected jobs report and the electoral development that still leaves some opportunity for democratic control of both houses of Congress.

Poll news added to the recent wave of volatility that crowded some of the crowded positions in the bond market

a

C B Morgan Chase

& Inc. A survey of fixed-income investors found that 25% were placed in high Treasury yields as the election approached versus 16% placed for lower returns, the largest short position since mid-May

To protect against the possibility of increased government spending under a Democrat-dominated government, many investors have reduced their holdings of long-term bonds compared to short-term debt, in what is known on Wall Street as a « steep » trade.

“I think nearly every hedge fund, even real money accounts, that we’ve been talking to has mostly been set up this way, in one way, shape, or form,” said Kevin Walter, co-chair of Treasurys Global Trading at

Barclays

PLC said that trading volumes on election night were seven times higher than the average as investors dumped their bets in the so-called blue wave.

Compared to other assets, YOS, some analysts said government bonds were particularly vulnerable to a surprise election result due to what additional fiscal stimulus would mean for the amount of new bonds entering the market.

« The difference between an additional $ 2 trillion in short-term debt is substantial from a treasury supply perspective, » said Michael Zizas, President of U Corporation.O Public policy research in & Municipal Strategist

Morgan Stanley

Traders and investors say that viable vaccines should lower demand for bonds by boosting economic outlook. In a better economy, investors may be more inclined to buy riskier assets over safer assets like Treasurys. Faster growth could also help lift inflation. , Which increases bets that the Federal Reserve may raise short-term interest rates sooner than previously expected

However, analysts said there is a limit to the amount of returns that can rise given current central bank policies in recent months, the Fed has indicated that it will leave short-term interest rates near zero until inflation exceeds its annual target of 2%, which is Rarely has happened in the years following the financial crisis as the central bank purchased nearly $ 80 billion of Treasurys a month Last week, Federal Reserve Chairman Jerome Powell said officials could adjust the program if needed to provide more support to the economy. p>

« Central banks around the world continue to increase the liquidity they provide, » said Matthew Hornbach, global head of macroeconomic strategy at Morgan Stanley Wealth Management. “Searching for yield will yield a yield, which limits the degree to which Treasury yields are high”

Yield, Bonds, Vaccine, Eurozone, Pfizer, US Treasury Security, Coronavirus