Several of the largest and most prestigious fixed income firms—DoubleLine Capital, TCW and PIMCO—are either avoiding or shorting the 30-year Treasury, wary of the unending growth of the federal deficit. The firms instead are buying the shortest maturities.
As widely noted, Warren Buffet is the largest holder of short, dated Treasuries, defined as less than two-years.
According to Blomberg, the 30-year Treasury has been an underperformer in 2025 as yields on this maturity have risen while those on the 2- 5- and 10-year notes have fallen. This divergence is rare—the last time it happened over a full year was 2001—underscoring the pressure on the long bonds as investors demand added compensation to lend to the US government for such a long period.
Some believe the steepness of the yield may revert in the opposite direction, perhaps by the same magnitude of 40 years ago…around 450 bps. It is the opposite of 2023 when the yield curve was inverted by a record 118 bps.
Others believe the Treasury will cease offering long dated Treasuries, a path that the Treasury has denied that it will take. The next 30-year Treasury auction is June 12. In recent Congressional Testimony, there were direct questions (and accusations) of yield curve suppression for political purposes.
Changing topics, the issue of dis information is increasing in the narrative, primarily the result of the massive proliferation of social media. What does one believe? How can informed decisions be made if the data backing the assumptions is suspect?
The WSJ wrote about certain tenants of the “One Big Beautiful Bill.” It is widely accepted that the Administration is changing 90 years of trade policy, a change that commenced in 2008, gained momentum in 2012 and went on steroids in 2020.
The Journal commented the misinformation is rampant on both sides of the political aisle with analysts’ views corrupted by preconceived political and corporate biases.
Psychologists will state that no one is objective, and the most subjective person is the one who declares they are completely objective.
Some conjecture, the majority of people/analysts do not know how to interpret any type of regulations/legislation. Writing simplistically the respective federal or legislative court must interpret the legislation/regulation but today these interpretations/opinions are being challenged based upon one’s predisposed politics.
I ask however, is today any different than yesterday, the major change, however, today’s disputes are carried out in the court of public opinion via social media?
The country will overcome, and the correct policy will be enacted but it can be potentially ugly, increasing market volatility until such is achieved.
Discussing yesterday’s market activity, after coming off the best May in 35 years, the S & P 500 edged lower. Some pointed to yet another change in potential tariff policy, others the growth of the federal deficit, while others the data or rising geopolitical tensions.
Commenting on the data, the ISM Manufacturing data offered little. The headline number was a little disappointing, falling slightly from the April reading. The major components were largely unchanged with little net move in price, employment or orders.
Today both factory orders and the JOLTs Job Openings data are released. What will this data suggest?
As noted several times, most believe the “hard data” will begin to deteriorate in May. Yesterday’s data did not support this view. What about today’s?
The long end of the Treasury market sold off causing a nominal steepening of the curve, perhaps the result of the rising narrative that a “buyers strike” is emerging in long dated debt.
Last night the foreign markets were mixed. London was up 0.16%, Paris down 0.19% and Frankfurt up 0.18%. China was up 0.43%, Japan down 0.06% and Hang Seng. Up 1.53%.
Futures ae down about 0.4% on the warning from the OECD that economic growth may slow because of the tariffs. The 10-year is up 2/32 to yield 4.42%.
