The yield on the 30-year US Treasury bond climbed to its highest level since 2002, breaking through 5.61% on Tuesday, September 29, rising for a sixth consecutive day amid intensifying selling pressure in global bond markets worth roughly 32 trillion dollars, driven by inflation concerns, elevated oil prices, and a heavy volume of corporate debt issuance. Michael Cloherty, head of US rates strategy at CIBC Capital Markets, said that while long-term bond yields look attractive in value terms compared with past levels, the market has yet to see clear large-scale buying step in to support them. Part of the inflation pressure stems from high oil prices caused by the war in the Middle East, prompting investors to increase bets that several central banks, including the Fed, may need to raise interest rates further. However, those expectations eased somewhat after John Williams, president of the Federal Reserve Bank of New York, said another increase in the target rate range may be appropriate late this year, sending the 2-year US Treasury yield down by as much as 0.05% before moving around 4.89%, while the 10-year yield stood at about 5.25%, near its highest since 2007, and US Treasuries have returned a total of negative 2.6% since the start of this year, compared with a gain of 6.3% last year. Pressure is also coming from a wave of corporate bond issuance, with Paramount Skydance Corp. beginning to offer investment-grade notes as a key part of a 52 billion dollar financing package for its acquisition of Warner Bros. Discovery; the company plans to raise about 32 billion dollars through bond sales, and Monty Gandhi, a rates strategist at SMBC, said the offering ranks as the fifth-largest investment-grade bond deal ever.
Paramount Skydance Corporation Class B Common StockParamount Skydance is issuing investment-grade notes as part of a $52B financing package, adding to the corporate debt supply pressuring yields and raising its own borrowing costs.
Warner Bros Discovery IncWarner Bros. Discovery is the acquisition target in Paramount Skydance's $52B financing package, but the article only notes the bond offering tied to the deal.
30-year Treasury yield broke through 5.61%, its highest in 24 years, on a sixth straight day of selling driven by inflation worries, oil prices, and corporate debt issuance.
10-year Treasury yield stood near 5.25%, its highest since 2007, amid inflation concerns, elevated oil prices, and heavy corporate issuance.
2-year Treasury yield fell as much as 0.05% to around 4.89% after NY Fed's Williams said another rate hike may be appropriate late this year.
