Yields on 30-year Treasuries are on track to log their largest quarterly jump since 2009, stoking anxiety that the bond rout of the past few months could reverberate across financial markets.
The long-bond yield has risen around 84 basis points since the end of June and touched about 4.81% Thursday, the highest since 2010. At one point before yields came off the highs in Thursday New York trading, the quarterly increase reached the steepest since the three months leading up to the stock-market crash in October 1987.
“We could see something break when you see this kind of volatility,” Thierry Wizman, director of global currencies and an interest-rate strategist at Macquarie Futures, said on Bloomberg Television on Thursday.US government debt has declined about 3.4% this quarter, for a 1.8% drop this year, according to Bloomberg index data through Wednesday. Treasuries are heading for a record third straight annual loss, after sinking 12.5% last year. Long bonds have lost 12% since June.
“One characteristic of this bear market in bonds is that there hasn’t yet been a major, negative feedback as a result of those higher yields,” said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management. “We thought it was the banking issue last spring,” when several regional banks collapsed under the weight of losses on fixed-income holdings and a deposit flight.
“That universe is sitting on a hot mess of substantial unrealized losses in their portfolios, particularly from any-and-all US Treasuries purchases made over the course of the past year,” he wrote in a note Thursday.
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