Barclays say the cure for plunging bond prices may be worse than the disease

<p>An analyst note from Barclays on Friday last week on the cascade lower for bonds:</p><ul><li> “There is no magic level of yields that, when reached, will automatically draw in enough buyers to spark a sustained bond rally,”</li><li>“In the short term, we can think of one scenario where bonds rally materially. If risk assets fall sharply in the coming weeks.”</li><li><p> “The magnitude of the bond selloff has been so stunning that stocks are arguably more expensive than a month ago, from a valuation standpoint”</p></li><li><p>“We believe that the eventual path to bonds’ stabilizing lies through a further re-pricing lower of risk assets.”</p></li></ul><p>More:</p><ul><li>The Fed is unlikely to dial back its quantitative tightening program (and thus the Fed will remain a net seller of Treasuries)</li><li>The increase in bond supply due to the rising deficit is also driving up the term premium</li></ul><p>—</p><p>US 10 year yields, weekly candles:</p><p>On the bright side, the yield has backed off from 5%</p>

This article was written by Eamonn Sheridan at www.forexlive.com.