US Treasury Outlook: Will the Correlation Between Stocks and Bonds Return?
智通财经2026/09/15 12:06Show original
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- Before major central bank meetings, medium-term government bonds led yields to multi-decade highs, and the situation may become even more complicated.
- Bond market sell-off, led by Japanese government bonds, has resumed. Japanese government bond yields reached the highest level in decades, and the US 10-year Treasury yield climbed to its highest since 2007.
- The Federal Reserve and Bank of Japan will announce their rate decisions on Wednesday and Friday, respectively. The market expects both to raise rates by 25 basis points.
- Japan's ruling party and Prime Minister finalized a plan to cut the consumption tax and provide household subsidies without detailing the funding sources. The finance minister stated that funding would be sourced by reviewing expenditures and revenues.
- Japanese government bonds were unmoved by this; 20-year and 30-year yields closed up by 7 basis points and 8.5 basis points, respectively, and the 10-year yield briefly touched 3.035%, the highest level in 30 years.
- The yen weakened 0.3% against the US dollar to 154.81.
- The US Treasury Secretary announced increased buybacks of 10- to 30-year Treasuries for the remainder of this quarter; meanwhile, there are reports the UK may halt long-dated bond sales, and Europe faces challenges financing defense and infrastructure spending.
- The Central Bank of Norway previously announced it would reduce its bond allocation from 70% to 50%, forcing long-term bond investors to reassess.
- Bonds have traditionally served as risk diversifiers due to a negative correlation with stocks. However, recently, high yields are weighing on growth stocks, causing simultaneous declines in both stocks and bonds and worsening portfolio performance.
- If the recent performance is not only about inflation but also driven by concerns over debt sustainability, the stock-bond correlation may converge. However, if high rates trigger a recession and force central banks to cut rates, the certainty of this scenario diminishes.
- It's reasonable to question the role of bonds as a risk diversification tool and to also consider inflation-protected bonds, short-duration bonds, and other assets.
- On the day, long-end US Treasury yields rose 2 to 5 basis points. The 10-year yield fluctuated in the 4.98% to 5.04% range. Tactically, there is an inclination to buy duration when the 10-year yield reaches 5% or above.
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