Treasury yields surge to highest level since 2007 on higher rate fears
Stocks fall and gold rises as Middle East tensions push investors to haven assets. Treasury yields rose to their highest level in 16 years and global stocks sank on Wednesday as nervous investors weighed up signs of US economic resilience to higher interest rates. (Financial Times | Oct 18) see also Long-end Treasuries hit by wildest swings since 2020 pandemic (Bloomberg Markets | Oct 17)
US bond market is losing its strategic footing
Last week’s unusual turbulence in US Treasuries points to a deeper issue than just the latest reading of the runes on inflation and the interest rate intentions of the Federal Reserve. The US bond market is losing its strategic footing, whether in economics, policy, or technical aspects. Unusual volatility in yields points to longer-term challenges for the most influential segment of the world’s financial markets. (Financial Times - opinion | Oct 17)
US regulator pledges harsher punishment for Wall Street misdeeds
Wall Street firms will soon face stiffer penalties for running afoul of US derivatives rules and more often admit their misconduct when settling with the Commodity Futures Trading Commission. When US regulators, including the CFTC, agree to resolve cases, financial companies are often allowed to pay fines while not admitting to the government’s allegations. But the commission’s top enforcement attorney, Ian McGinley, said Tuesday that the watchdog will start taking a tougher stance in negotiations. (Bloomberg Markets | Oct 17)
Fiduciary rule regulatory gaps get Labor agency's attention
The US Labor Department is focusing on filling in the gaps state and federal regulations have left behind as it moves forward with rulemaking that will redefine who qualifies as a retirement plan investment advice fiduciary. Regulation Best Interest, which the Securities and Exchange Commission promulgated in 2019, and the best-interest model language dozens of states have adopted doesn’t protect all private-sector retirement plans and participants from receiving conflicted advice. (Bloomberg Law | Oct 17)
A recession is no longer the consensus
Economists are turning optimistic on the US economy. They now think it will skirt a recession, the Federal Reserve is done raising interest rates and inflation will continue to ease. In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time since the middle of the year that they have put the probability below 50%. (The Wall Street Journal | Oct 15)
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