FactSet数据显示，10年期美债收益率10月以来累计上涨了50个基点。即便经历本周一回调，目前10年期美债收益率依然维持在4.309%的高位，位列50天和200天移动平均线之上。Bond investors are "voting with their feet," betting that the continued interest rate cuts by the Fed and the expansionary fiscal policy of the next government will push up long-term inflation. Once the yield on the 10-year U.S. Treasury bonds is pushed up to 5%, it will impact the Fed's subsequent rate-cutting actions.
On the eve of the results of two key events in the United States, the presidential election and the Federal Reserve meeting, the "bond vigilantes" seem to have taken the lead in the market, intending to push the 10-year US Treasury bond yield to 5%, forcing the Federal Reserve to reconsider the necessity of further interest rate cuts.
"Bond vigilantes" - first proposed by Wall Street senior analyst Ed Yardeni in the 1980s, refers to investors who successfully pressure governments and central banks to change policies by lowering bond prices and raising bond yields.
FactSet data shows that the 10-year US Treasury bond yield has risen by 50 basis points since October. Even after experiencing a pullback this Monday, the current 10-year US Treasury bond yield remains high at 4.309%, above the 50-day and 200-day moving averages.
In his report on Monday, Ed Yardeni warned that the "bond vigilantes" are dominating the market, and they may push the 10-year US Treasury bond yield to 5%, thereby affecting the Federal Reserve's future interest rate cut actions.
Yardeni stated that despite the year-on-year decline in inflation rate in September, weaker-than-expected job growth in October, and manufacturing activity, the bond market seems to have ignored the "factors that usually prevent yield increases":
Investors seem more concerned with stimulus measures - fiscal and monetary policies - which are likely to be introduced in an economy that does not necessarily need these measures.
This may affect the Federal Reserve's interest rate cut plans. Yardeni mentioned that despite the Federal Reserve's decision in September to ease monetary policy by cutting the benchmark interest rate, the bond market has recently "tightened the economy itself" by the rise in US Treasury bond yields:
The bond market can easily offset the impact of another interest rate cut.
This is because the bond market believes that the Fed's rate cut is too large and too early, thus raising long-term inflation expectations.
Yardeni believes that with the U.S. economy maintaining expansion and the S&P 500 index hovering at historic highs, the Fed's continued rate cuts are "unnecessary":
Any further rate cuts would increase the possibility of a stock market collapse similar to the one in the 1990s.
The outcome of the U.S. presidential election may further exacerbate this situation. Yardeni believes that concerns about the next government taking more fiscal measures have heightened these expectations.
Currently, both Trump and Harris have not clearly stated how to handle the enormous U.S. debt. Due to Trump's economic policies focusing on extensive tax cuts and tariffs, investors believe that the risks of rising deficits and inflation will be greater if Trump is re-elected.
State Street macro strategist Noel Dixon warns that a key consideration for a Trump victory is whether the Republican Party can control both the House and Senate, allowing him to implement many fiscal agendas:
This is uncharted territory. In this scenario, the 10-year U.S. Treasury bond yield could rise from 4.3% to over 5%.
