Post-CPI, the Fed is seen as likely to hike with about 88.5% odds, risking further curve steepening. The piece highlights structural funding pressures in Treasuries, repo-liquidity strains, and potential forced deleveraging, which can push long-end yields higher. For IEF, near-term weakness is likely as yields rise, with potential relief if curve dynamics stabilize.
Global bond yields surged across major markets, with the US 10-year briefly at 4.8%, Japan at 3%, and UK gilts at 5.27%. Oil trades above $94, reinforcing inflation concerns amid hawkish central-bank guidance. The trend is described as a multi-year shift, suggesting IEF faces persistent price pressure as real yields rise and policy stays restrictive.
U.S. Treasury yields declined sharply due to an unexpected increase in wholesale inflation, prompting a flight-to-safety into bonds. Increasing fears about AI-induced job losses and stock market turmoil further pressured yields. This suggests a potential for continued low yields in the near term as investors seek safety amid volatility.