Latest news with #GeorgeCatrambone
Mint
5 days ago
- Business
- Mint
US Treasuries Slip for Second Day as New Jobless Claims Fall
(Bloomberg) -- Treasuries fell for a second day as fresh data showing resilience in the US labor market gave traders pause about the Federal Reserve's path on interest-rate cuts Yields settled about three basis points higher across most tenors, led by shorter-dated debt, which is more sensitive to changes in monetary policy. And interest-rate swaps showed traders slightly pared bets on Fed rate cuts. They are now pricing in 42 basis points of reductions by the end of the year, with the first full cut coming by the October meeting. 'The bottom line is that the Fed can't credibly cut rates with an unemployment rate of 4.1%,' said George Catrambone, head of fixed income, DWS Americas. 'There is a glass ceiling on how high yields can push out of their current range with a Fed that's frozen in place.' Data released Thursday showed initial claims for unemployment benefits fell to 217,000 in the week ended July 19, the lowest since mid-April. Another pressure point for traders is a dispute between President Donald Trump and Federal Reserve Chair Jerome Powell over construction works, which the president has criticized for cost overruns. Trump on Thursday toured the central bank's headquarters, where a $2.5 billion renovation is ongoing. 'We would be helped if interest rates would come down,' Trump told reporters, standing next to Powell. 'But we're going to see how the board rules on that soon. I'd love to see them come down a lot.' Traders have ruled out a rate cut at the Fed's meeting next week. 'The mounting risk of the Fed being seen as acting more on a political than a fundamental level is a sizable threat to long-end rates over the medium term,' Rabobank strategists wrote in a note. What Bloomberg Strategists say... 'This period of quiet in rates may prove transitory given the risks on the horizon. Traders appear content to wait for Fed Day, GDP and payrolls next week to deliver a directional cue, but the setup argues for a potential repricing. Since 2023, each period of consolidation in 2s10s has been followed by a robust steepening of the curve' - Brendan Fagan, Macro Strategist, Markets Live For the full analysis, click here. With Fed speakers in a blackout period ahead of that meeting, bond investors were largely focused on the weekly jobless claims report. The six weeks of declines is the longest such stretch since 2022. 'The labor market deterioration has slowed or stopped, with the caveat the labor supply, immigration, negative data revisions are making reading the labor market data tricky,' said Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment. Market expectations of rate cuts starting from late September, 'may be off the table if unemployment is unchanged next week,' he said. European government bonds also fell after the European Central Bank tempered expectations of a possible interest rate cut in September. Investors were already turning broadly more risk-on amid deals between the US and its trading partners. The European Union and the US are progressing toward an agreement that would set a 15% tariff for most imports, according to diplomats briefed on the negotiations. Earlier on Thursday, a $21 billion auction of 10-year Treasury Inflation-Protected Securities drew solid demand. --With assistance from Naomi Tajitsu. (Updates prices in second paragraph, adds Bloomberg strategist quote and details on Trump tour.) More stories like this are available on
Yahoo
6 days ago
- Business
- Yahoo
US Treasuries Fall for Second Day as New Jobless Claims Fall
(Bloomberg) -- Treasuries slipped for a second day after new jobless claims fell for a sixth week, suggesting Federal Reserve policymakers will have to contend with a resilient US labor market. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom Can This Bridge Ease the Troubled US-Canadian Relationship? The selloff pushed Treasury yields on most tenors two to four basis points higher as of early afternoon in New York, with the benchmark 10-year's trading at 4.4%. Interest-rate swaps showed traders slightly pared bets on Fed rate cuts. They are now pricing in 42 basis points of reductions by the end of the year, with the first full cut coming by the October meeting. 'The bottom line is that the Fed can't credibly cut rates with an unemployment rate of 4.1%,' said George Catrambone, head of fixed income, DWS Americas. 'There is a glass ceiling on how high yields can push out of their current range with a Fed that's frozen in place.' Data released Thursday showed initial claims for unemployment benefits fell to 217,000 in the week ended July 19, the lowest since mid-April. The six weeks of declines is the longest such stretch since 2022. 'The labor market deterioration has slowed or stopped, with the caveat the labor supply, immigration, negative data revisions are making reading the labor market data tricky,' said Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment. Market expectations of rate cuts starting from late September, 'may be off the table if unemployment is unchanged next week,' he said. European government bonds also stumbled Thursday after the European Central Bank tempered expectations of a possible interest rate cut in September. Investors were already turning broadly more risk-on amid deals between the US and its trading partners. The European Union and the US are progressing toward an agreement that would set a 15% tariff for most imports, according to diplomats briefed on the negotiations. Another pressure point for traders is a dispute between President Donald Trump and Federal Reserve Chair Jerome Powell over construction works, which the president has criticized for cost overruns. Last week, Trump has said that he didn't plan to fire Powell before the end of his term. Trump was set for a tour later Thursday of the $2.5 billion renovation of the central bank's headquarters. 'The mounting risk of the Fed being seen as acting more on a political than a fundamental level is a sizable threat to long-end rates over the medium term,' Rabobank strategists wrote in a note. Earlier on Thursday, a $21 billion auction of 10-year Treasury Inflation-Protected Securities drew solid demand. --With assistance from Naomi Tajitsu. (Updates prices in second paragraph, adds strategist quote.) Burning Man Is Burning Through Cash Elon Musk's Empire Is Creaking Under the Strain of Elon Musk It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan A Rebel Army Is Building a Rare-Earth Empire on China's Border How Hims Became the King of Knockoff Weight-Loss Drugs ©2025 Bloomberg L.P.
Yahoo
15-06-2025
- Business
- Yahoo
Gold — not the dollar or Treasurys — is the new ‘risk-free' asset as Israel-Iran conflict rattles investors
Gold prices settled at a fresh record high on Friday, as Iran launched retaliatory missile strikes against Israel less than 24 hours after a widespread Israeli attack against Tehran's nuclear sites. 'Gold is the new risk-free asset in people's mind,' said George Catrambone, head of fixed income, Americas, at DWS, in an interview — adding that, right now, 10-year and 30-year Treasury securities clearly weren't favored as safety plays. Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. I'm in my 80s and have 2 kids. How do I choose between them to be my executor? 'He failed in his fiduciary duty': My brother liquidated our mother's 401(k) for her nursing home. He claimed the rest. These defense stocks offer the best growth prospects, as the Israel-Iran conflict fuels new interest in the sector 'I'm 68 and my 401(k) has dwindled to $82,000': My husband committed financial infidelity and has $50,000 in credit-card debt. What now? That's a lesson learned since extreme market tumult erupted about two months ago, after President Donald Trump shocked markets on April 2 with his widespread 'liberation day' tariffs that were far higher than anticipated, Catrambone noted. 'Until proven otherwise, gold is the new alternative risk-free asset,' he said. Gold, the U.S. dollar and Treasury securities have all long been staples that investors flocked to for safety during times of rising geopolitical tensions or market stress. That was, until this year. Even before Trump's election in November, his tough talk on tariffs during the campaign had global investors flocking to gold as a way to diversify their reserves beyond the U.S. dollar. Since April's tariff tumult, fears of a lasting 'sell America' trade have loomed over global markets, with the ICE U.S. Dollar Index DXY up 0.3% on Friday, but still 9.5% lower on the year so far. Meanwhile, the most active contract for gold futures GC00 GCQ25 settled at a record $3,452.80 Friday, its 24th all-time high this year, according to Dow Jones Market Data. Working against Treasurys has been a focus on the large U.S. government debt load, as well as recent fiscal deficit projections under the Republican tax-and-spending bill that's now in the hands of the Senate. Interest payments on America's $36 trillion national debt cost more than $1 trillion per annum, according to a BofA Global Research team led by investment strategist Michael Hartnett. What's more, interest payments will keep rising until the 5-year Treasury yield BX:TMUBMUSD05Y falls below 3.3% from its current 4% level, the BofA team wrote in a Friday client note. That's why the Trump administration wants the Federal Reserve to cut interest rates quickly in the second half of this year, the BofA team noted. The 10-year Treasury yield BX:TMUBMUSD10Y rose to 4.423% Friday, or 80 basis points above its one-year low, while the 30-year 'long bond' yield BX:TMUBMUSD30Y climbed to 4.913%, about 98 basis points above its lowest 12-month level, according to Dow Jones Market Data. The BofA Global team pegged U.S. debt and deficits as the biggest factors driving the consensus 'short the long bond' trade on Wall Street. Yet the selloff in the Treasury market has come amid a backdrop where investors have yet to face a prolonged risk-off period. The S&P 500 index SPX ended Friday sharply lower, but was still almost 20% above its April 8 closing low, and only 2.7% off its 6,144.15 record closing high on Feb. 19, according to Dow Jones Market Data. 'I wouldn't throw the baby out with the bathwater,' Catrambone said. 'There's a point where gold is simply overvalued. That's why the trade doesn't hold up on a long-term basis.' 'It might be another Apple or Microsoft': My wife invested $100K in one stock and it exploded 1,500%. Do we sell? 'I'm not wildly wealthy, but I've done well': I'm 79 and have $3 million in assets. Should I set up 529 plans for my grandkids? My husband is in hospice care. Friends say his children are lining up for his money. What can I do? My mother-in-law thought the world's richest man needed Apple gift cards. How on Earth could she fall for this scam? Why bonds aren't acting like a safe haven for investors amid the Israel-Iran conflict
The Star
22-05-2025
- Business
- The Star
Bond market warns US on dangers of deficit
NEW YORK: In the world's biggest bond market, investors are pushing back against President Donald Trump's tax-cut plan. On Wednesday, they drove yields on benchmark 30-year Treasuries to as high as 5.1%, leaving them just shy of a two-decade high and sparking declines in stocks and the US dollar, as administration officials met with Republican lawmakers to hammer out a deal to enact the cuts. The concern is that the tax bill would add trillions of US dollars in the coming years to already bulging budget deficits at a time when investor appetite is waning for US assets across the globe. 'Make no mistake, the bond market will have its own vote on the terms of the budget bill,' said George Catrambone, head of fixed income and trading at asset management company DWS Americas. 'It doesn't seem this president or this Congress is actually going to meaningfully reduce the deficit.' Investor sentiment toward Treasuries, which took a big hit after Moody's Ratings stripped the United States of its top credit grade late last week, deteriorated further on Wednesday following an auction of 20-year bonds that drew surprisingly tepid demand. The rout deepened a weeks-long sell-off in bonds and underscored investors' deepening disenchantment with the push in Washington to pile on more and more debt. The fixed-income slide also emboldened conservative Republican lawmakers who oppose Trump's tax-cut plan. Ahead of a key negotiation session scheduled for yesterday afternoon in the White House, some of them took to social media to point out the bond slump and the message it was sending. Representative Chip Roy, a Texas Republican and a ringleader of the fiscal hawks, noted a posting on X about the 'horrible bond auction'. Separately, Warren Davidson, an Ohio Republican, also highlighted a post on rising yields. Overall, bond investors are demanding more compensation to buy longer maturities – and not just for the United States. Japanese and British 30-year yields also have risen sharply this week. 'The bond market is giving a warning sign to policymakers that fiscal sustainability issues cannot be ignored for too much longer,' said Priya Misra, a portfolio manager at JPMorgan Asset Management. 'It is not just the bond market, but now those fears are gripping risk sentiment and equities, and credit are also paying attention.' The stirring of the so-called bond vigilantes marks a moment when enough investors decide that only by imposing higher borrowing costs will governments finally bow to the pressure and cut spending. It's a process that last played out in the United States during the early stages of the Clinton administration in 1993 and in Europe after the financial crisis. 'The market's going to bring discipline to this thing one way or the other,' said Tim Magnusson, the chief investment officer at US$11.5bil hedge fund Garda Capital Partners. 'Until you tackle entitlement reform – social security, Medicare, Medicaid – they are not going to move the needle. That's the only way. It's always the bond market that brings the discipline.' While current US yields between 4% and 5% are near levels that prevailed before 2007 and the financial crisis – and the United States historically has paid far higher rates at times – debt and deficits now are exponentially bigger, and that makes all the difference. A look at the fiscal red ink reinforces why the bond market is on edge. The ratio of total US public debt to the size of the economy is around 100%, according to the Congressional Budget Office (CBO). Interest payments alone were about US$880bil last year, CBO data show, exceeding the defence budget. The amount of outstanding Treasuries has skyrocketed to nearly US$30 trillion from less than US$14 trillion at the end of 2016, a reflection of tax cuts passed during Trump's first term and then an explosion in borrowing during Covid, under both Trump and former president Joe Biden. Annual gross sales of government debt hit a record US$2.6 trillion last year, according to Sifma, the bond market's trade group. 'The administration appears to be making a pretty pretty adventurous or risky bet that growth is going to bail the debt and deficit trajectory out,' said Bill Campbell, a portfolio manager at investment management firm DoubleLine. 'But you are running the risk that if it doesn't, you've now increased the trajectory of fiscal deterioration. You're running the risk that you're going to potentially make that trajectory even more difficult to address going forward.' The intensifying investor concern looms as a challenge for the United States, which has taken full advantage of the US dollar's status as the world's primary reserve currency through the decades. It also reinforces the worst-case scenario painted by Treasury Secretary Scott Bessent, who this month told US lawmakers that the nation's debt path is unsustainable. He also indicated an awareness of the power of the bond vigilantes, adding it's 'very difficult to know' the tipping point at which investors would 'rebel'. 'With trio of auctions signalling less and less confidence from global investors in holding longer-dated durations, the path of least resistance is for higher yields, even if the move seems overdone,' said Alyce Andres, Bloomberg US Rates foreign exchange strategist in Chicago. — Bloomberg
Yahoo
20-03-2025
- Business
- Yahoo
Could the US return to being a 'manufacturing powerhouse'?
DWS Group head of fixed income and head of trading George Catrambone speaks with Brad Smith and Madison Mills on the headwinds he sees coming for US manufacturing and wages, while also believing US exceptionalism in the bond market (^TYX, ^TNX, ^FVX) to be transitioning into European markets. Also catch George Catrambone explain his bull and bear cases for markets (^DJI, ^IXIC, ^GSPC) coming off the Federal Reserve's March decision to hold interest rates. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Sign in to access your portfolio
