(Financial World) What signals are released by the continued increase in U.S. bond yields?

  China News Service, Beijing, March 8 (Liu Liang) As the anchor of global asset pricing, the recent continuous increase in the yield of 10-year US Treasury bonds has attracted widespread attention from the market.

Analysts here believe that behind its "high-flying progress", it actually reflects the changes that are taking place in the current macroeconomic environment in the United States.

  In the past six months, the 10-year U.S. Treasury yield has continued to rise.

Since the beginning of this year, the rate of increase has been even worse.

Since rising above 1.1% in January this year, the 10-year U.S. Treasury yield has continuously exceeded 1.2%, 1.3%, and 1.4%. It reached the key point of 1.5% on February 25, and it also rose during the intraday market. Breaking 1.6%, a new high since the epidemic.

Currently, the 10-year U.S. Treasury yield is still hovering around 1.5%.

  "The rise in U.S. Treasury yields is the inevitable result of the global and U.S. nominal economic growth and the expected improvement, and the recent rapid upswing is the core reason that arouses market attention." China Merchants Securities analyst Xie Yaxuan said bluntly The unique status of the U.S. and the U.S. dollar has been regarded as the anchor of global asset pricing, making it even more concerned about its upward breakthrough.

  Specifically, the current market consensus believes that the following three main factors are driving this U.S. bond yield to continue to rise.

  One is the improvement in inflation expectations.

With the large-scale vaccination in the world, the US economic recovery is expected to strengthen, which strengthens inflation expectations and catalyzes the upward trend of US bond yields.

Second, the Fed has stalled.

In response to the sharp rise in U.S. bond yields, the Fed has not recently issued a signal of tightening policy.

The third is the increase in market hedging psychology.

Market analysts hinted that the current rise in U.S. bond yields may make some investors tend to sell long-term bonds to offset the risks brought by long-term investments, causing yields to rise further.

  With the rise in U.S. bond yields, the U.S. stock market and bond market are under considerable pressure for adjustment.

Taking the stock market as an example, Wall Street analysts pointed out that the continued upward trend in U.S. bond yields may reduce the attractiveness of the stock market, and at the same time may cause a huge blow to technology stocks, because these companies have long relied on easy borrowing to achieve higher growth.

As of last week, the Nasdaq 100 index, which is mainly composed of large US technology stocks, has fallen for the third consecutive week, and the value of the US technology stock market has evaporated by trillions of dollars within three weeks.

  However, the U.S. authorities do not seem to be worried about the adjustment risks brought about by rising U.S. bond yields.

Recently, officials including Fed Chairman Powell stated that the upward trend in U.S. Treasury yields is a reflection of the upturn in the economy and should be tolerated. They also dispelled market concerns about inflation expectations reflected by the sharp rise in Treasury yields.

  Judging from the recent employment and manufactured goods orders data released by the United States, the US economic situation is better than market expectations, further strengthening market expectations for economic recovery and rising inflation, and increasing the upward pressure on long-term Treasury bond yields.

  Looking forward to the future, Zhao Wei, chief economist of Kaiyuan Securities, said that with the accelerated recovery of the US economy and the sharp rise in US inflationary pressures, there is a greater risk that the 10-year US Treasury yield will rise above 2%, which will have an adverse impact on highly valued assets.

Goldman Sachs' latest forecast last week also showed that by the end of 2021, strong economic data should push the 10-year U.S. Treasury yield to around 2%.

  Market analysts believe that taking into account the imminent US fiscal stimulus, economic growth prospects and inflation expectations may boost US bond yields upward.

However, some analysts pointed out that the stimulus package will help boost employment and household consumption expenditure in the short term, but the marginal benefits will gradually weaken around the middle of the year, which may prompt a fall in U.S. bond yields in the later period.