JPMorgan's Jay Barry on the Big Selloff in Bonds
Odd Lots
Bloomberg
4.4 • 1.6K Ratings
🗓️ 11 October 2023
⏱️ 35 minutes
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Summary
In the past week, the bond market has experienced a historic selloff. Yields on benchmark 10-year US Treasuries soared towards 4.9% while those on 30-year debt reached the highest since 2007. But the exact cause of these dramatic moves in the most important market in the world aren't entirely clear, with people looking at everything from the Federal Reserve's outlook for interest rates, to the the jump in the price of oil, or booming supply as the deficit expands, as well as more technical things like the term premium. So what's driving the selloff and how do we disaggregate interrelated things like supply and demand? How do you decompose longer-term and short-term factors feeding into the price of US Treasuries? What can stem the big moves? And what are investors saying about their appetite for US debt? We speak with Jay Barry, co-head of US interest rate strategy at JPMorgan Chase, about the big bond market selloff.
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| 0:59.3 | Wyzontal. So, Joe, the big story in markets up until relatively recently has been the bond |
| 1:06.1 | sell-off, like quite a dramatic sell-off across the fixed income space. Yeah, really over, like, |
| 1:12.2 | I guess is the last couple months. So, the yield today, well, we can sort of talk about the bond |
| 1:17.8 | market up until today. But, you know, we had been like in the threes and in the fours and then we |
| 1:22.5 | got as almost a size 4.9% on the 10 year. We had a little bit of a pullback. We're recording this |
| 1:28.6 | October 10th, but we are very high by any recent standard. Yeah, it is not lost on me that we are |
| 1:34.7 | recording our bond sell-off episode on the day when treasuries are recording their best one-day |
| 1:39.6 | performance since I think March of last year. But, you know, we're trying. We're trying here, |
| 1:44.4 | but you're right. The recent bond market sell-off, it was one of those times when you see a lot of |
| 1:48.6 | superlatives around a lot of like highest yields since 2007, a lot of talk of standard deviation moves |
| 1:56.5 | when we try to start calculating, you know, how many trading days it would normal trading days it |
| 2:01.2 | would take to get moves of this size. But the interesting thing about this whole dynamic is it's |
| 2:07.6 | not really clear what the proximate cause of the sell-off is. Right. So you have a lot of people |
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