Text/Editor of Huitong.com: Qin Meng

A corner of the U.S. Treasury bond market is surging, or it may bring new shocks to global risk assets.Goldman Sachs Group expects that the recovery of the U.S. economy will enable the real yield of U.S. long-term Treasury bonds to rise by about 40 basis points, thus reaching the level before the new crown epidemic

Before the bizarre fall in U.S. Treasury yields this month, the sharp decline in U.S. Treasury bonds this year shocked Wall Street.There is a view that if inflation-adjusted yields rebound positively, the market may be caught off guard

Mueller-Glissmann pointed out that the actual rate of return is still 40 to 50 basis points lower than the average level of the five years before the outbreak of the new crown crisis. At that time, investors were generally pessimistic about the long-term growth prospects, and this repricing does not necessarily happen in the short term. , May be carried out within a few quarters; there is still room for the volatility of the interest rate market, which may at least cause temporary indigestion of other assets;

Goldman Sachs strategists recommend that clients use options to bet on higher yields, or go long on the volatility of U.S. Treasury bonds

The US 10-year Treasury bond yield situation is as follows: A change of 2 basis points can show that since mid-March, the range of fluctuations in the Treasury bond market has not been very large.

When considering the conditions required to break through this range, an important lesson from Monday is that it is not enough just for oil prices to fall to negative values. The Fed’s increased participation in the secondary market for US Treasury bonds (effectively monetizing the deficit) has reshaped investors’ expectations of achievable volatility.

The unlimited quantitative easing policy played a role in this transition, and the conversation about the possibility of the upper limit of the yield curve, advocated by Fed officials, also played a role.

Trier Bank analysts believe that, in contrast, it is more realistic for the yield to fall to 0.25% in the short term. This is based on the assumption that although there is a broad consensus that “things will get worse” in terms of the impact of the spread of the epidemic on actual output, the downward pressure on inflation is being guided, but it has not yet been fully integrated into the financial market.

Recently, in the context of abundant market liquidity and steady economic recovery, the global emerging market financial markets have begun to become sensitive, and it seems that both ups and downs are beginning to look at the 10-year U.S. Treasury yield.

As long as U.S. bond yields soar, it is no surprise that stocks, funds, or commodities will be suppressed and prices will fall.

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Gold bar at the gold exchange in Seoul, Korea. Photo: Yonhap / TTXVN According to FactSet data, for the whole week, the precious metal price is estimated to decrease by about 0.1%. In the first session of the week (April 19), gold prices went down after being traded at a much higher level than usual in the previous week. However, a weaker dollar and falling government bond yields have helped keep the metal from falling further. In the session of April 20, gold prices regained momentum, amid the decline in USD prices and US Treasury bond yields, increased demand for gold to preserve assets. This session, the dollar index fell 0.1% against major currencies after hitting a seven-week low, while the yield on 10-year US Treasury bonds fell 1.6%. Gold prices continued to increase by nearly 1% high in the session on April 21, when 10-year US bond yields fell below 1.6%, reducing the opportunity cost of holding gold and unprofitable assets. , while the dollar is at a low level. OANDA senior market analyst Edward Moya said gold prices have been adversely affected in the past few months due to rising bond yields, but now the precious metal price has increased quite a lot. Moya added that the global economic outlook is still volatile and investors will see more cautious measures in the next quarter. However, to the session of April 22, the gold price turned to decrease due to the strength of the USD. Edward Meir, an analyst at ED&F Man Capital Markets, said both the US dollar and 10 year US government bond yields rose, thereby putting pressure on gold prices. The dollar is up 0.2% against a basket of other major currencies, making gold more expensive for buyers holding other currencies. Meanwhile, the US 10-year government bond yields rose to their intraday high of 1.587%. Gold prices have fallen 6% this year so far, mainly due to pressure from the rise in US government bond yields. In the last session of the week (April 23), gold prices continued to decline, when positive data on the housing market boosted bond yields and reduced the attractiveness of this precious metal. According to statistics, new home sales in the US reached 1.021 million units in March, the highest level since 2006. Experts say this data is “heavy enough” to push yields higher and put pressure on gold prices. Specifically, the price of gold delivered in June decreased by 0.2% to $ 1,777.80 / ounce. Carsten Fritsch, an analyst at Commerzbank, said that in order for gold prices to skyrocket to $ 1,800 an ounce, the market needs to see a reversal of the capital flow of gold exchange funds. According to the analyst, the flow of gold out of ETFs has slowed down, with April averages reaching 1.5 tons, down from a corresponding nearly 6 tons in March. Mr. Fritsch forecasts that ETFs will increase their gold holdings and that the precious metal price will rise again in the second half of the year. In addition, some market analysts also believe that gold prices are likely to increase due to increased tensions between the US and Russia. Currently, investors are waiting for a policy meeting of the US Federal Reserve (Fed) expected to take place next week./.