Goldman Sachs The Markets
The fixed-income selloff: A new supply-demand dynamic?
Sep 29, 2023
The podcast discusses the recent rise in 10-year treasury yields and explores future rate expectations. It examines the shift in supply-demand dynamics in the fixed-income market and the potential implications for a soft landing. The hosts also analyze the global fixed-income sell-off and its impact on inflation and market volatility.
07:37
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Quick takeaways
- Rise in interest rates is causing a decline in US and European stocks, reflecting the resilience of the US economy.
- The sell-off in fixed income markets is due to a supply-demand imbalance caused by the Fed's quantitative tightening program and reduced holdings by various investors.
Deep dives
Rise in interest rates attributed to decline in US and European stocks
The recent decline in US and European stocks is being attributed to a rise in interest rates. The Federal Reserve's decision to decrease the number of rate cuts planned for next year and set the year-end rate above the neutral level has catalyzed the market moves. However, the Fed's move reflects the resilience of the US economy, which has held up well amidst higher rates. As long as the higher rates are driven by real yields and growth, rather than inflation, they can be viewed as a healthy development for the economy.
