Is The Market Pricing In A Higher Risk Premium For U.S. Treasuries?

2025-04-14 10:49:00 ET

Summary

• It may be premature to make definitive conclusions on how or if the role of Treasuries in the global ecosystem is changing, but to monitor the evolving risk it’s obvious where to look: Treasury yields.
• Fed funds futures are currently pricing in a high probability (80%) that the Fed will leave its target rate unchanged at a 4.25%-to-4.50% range at the next FOMC meeting on May 7.
• The main risk is that foreign buyers of Treasuries – China in particular – are selling US bonds, which will lift yields.

One week of trading doesn’t change decades of precedent for the world’s primary “safe” asset, but reports that the global marketplace is rethinking risk for US government bonds is deeply unsettling for several reasons....

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