However, the lower number of Aaa-rated issuers and the increase in US Treasury bond
issuance means that US Treasuries now account for around 75 per cent of all Aaa-rated government bonds available, up from 50 per cent in 2008.
As in the 2013 "taper tantrum", the rise in US Treasury bond
yields will continue to pressure the asset class and the Powell Fed could well raise the Fed Funds rate another 100 basis points in 2018-19 while shrinking the Fed balance sheet below $4 trillion.
Summary: Yield on 10-year US Treasury bond
hit its highest level in four years last week
In contrast, there has been buying of safe-haven assets of gold and the Japanese yen, and US Treasury Bond
yields turned lower.
US-based OpenDoor Securities (OpenDoor), a platform that was designed to improve liquidity in the US Treasury bond
markets, has said that it has hired a senior managing director.
Due to the US Treasury Department's suspension of 30-year bond issuance between 2001 and 2006, the gap in the exposures of the existing 10-Year US Treasury note and the US Treasury bond
futures has expanded from approximately eight years to about 14 years, creating customer demand for a new product that establishes 10-year yield exposure.
The most important theme in the world financial market since August has been th82dramatic rise in the US dollar against the world's major currencies, notably the Euro (economic contraction in Germany due to Russia sanctions and the subsequent Bundesbank/ECB "shock and awe" monetary easing), sterling (risk premium on the Scots referendum), Japanese yen (spike in US Treasury bond
yields on strong economic data and Abenomics reforms) and the Australian dollar (collapse of LNG, crude oil and iron ore prices).
I had projected a bloodbath in the US Treasury bond
market since late 2016, when it was obvious that Trump's tax reform would double the US budget deficit at the same time as the Federal Reserve prepared to "normalise" or shrink its balance sheet by $470 billion.
The offshore bonds were priced at 3.35 percent, about 166 basis points above the five-year US Treasury bond
yields, the report noted.
BANKING AND CREDIT NEWS-December 17, 2013--CME solution aims to close US Treasury bond
futures "delivery gap"
South Korea's Suhyup Bank is planning to price a five-year US dollar bond with a yield spread of around 285 basis points over the comparable US Treasury bond
Kexim is looking to pay 315 to 325 basis points over the comparable US Treasury bond
yield for a five-year bond, and between 305-315 basis points above comparable US Treasury bond
yield for a 10.25-year bond tranche.