Bond market purchases have become almost a constant during the month of August, which ends this weekend. Despite the rebound in yields in recent days, the profitability of the main assets in this area has been reduced throughout the summer and T note rent a 3.85%And It remains close to the lows of the year that it marked at the beginning of August.
“U.S. government bond yields have fallen significantly since July, particularly on short-duration securities,” Allianz Global Investors said. “This reflects expectations of rate cuts, driven by weakening US labor market data.and which the Federal Reserve (Fed) confirmed at the annual Jackson Hole conference,” they explain.
And Jerome Powell, the chairman of the most famous central bank on the planet, followed through on what was announced in the minutes of the Fed’s last rate meeting, anticipating the start of rate cuts at the annual central bankers’ symposium in September and shifting the focus from inflation to a possible excessive cooling in the labor market.
In this sense, the market believes that if expectations are met, the process of falling silver prices will be much shorter than usual, and in less than 12 months almost the entire adjustment will have taken place, when In the history of the Fed, rate cutting cycles have typically lasted between 2 and 3 years..
That’s why U.S. Treasury bonds are on their strongest monthly winning streak in three years. North American government bonds yielded 1.5% in August through Thursday, poised for a fourth month of gains that would be the longest streak since July 2021, according to the Bloomberg U.S. Treasury Total Return Index.
Spanish bonds fall 3%
In Europe, the trend is similar. Despite the general drop in 10-year bond prices this week in continental countries, the bond of some references such as the Spanish one has already been yielding a little more than 3% for a decade. It was precisely this 3% barrier that was crossed during the session of the 22nd, a level that had not moved since January 1st..
