Fixed income market watchers have been watching the fixed income market. They watched it so hard they came up with variables. A number of them. The variables started in June, which is the month that comes after May, and they explain why yields are surging at what the headline calls "a bad time." As opposed to all those good times for surging debt yields that we've enjoyed throughout history.
The U.S. government keeps borrowing money. Lenders keep demanding higher interest rates to compensate them for the risk that the U.S. government might one day decide to pay them back in commemorative coins or apology letters. This is presented as breaking news despite happening continuously since Alexander Hamilton invented the national debt specifically to f*ck over your retirement account.
Market watchers ascribed the move to variables because saying "we don't know" doesn't get you quoted in financial media. They picked June as the starting point because it sounds scientific. They could have picked March or September or the vernal equinox but June tested better with focus groups of people who manage other people's money for a living.
Retail traders read headlines like this and panic-sell their bond ETFs at exactly the wrong moment. Then they buy them back three weeks later after watching a TikTok about how rising yields create opportunity. The cycle repeats until they're trading options on Treasury futures with money borrowed from their home equity line of credit.
The professional response involves monitoring multiple variables simultaneously while pretending this is different from guessing. Everyone agrees the timing is bad. Nobody mentions that all timing is bad when you're watching your portfolio value move in the direction you didn't want it to move.
Yields surge because bond prices fall because someone sold because someone else sold first because a variable happened in June.
Photo by Marek Studzinski on Unsplash
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