Bonds

Bond traders are bracing for Treasury yields to keep pushing higher after the Fed signaled it's likely to hold interest rates at lofty levels well into next year.

Yields on longer-dated debt are so high that even if the Fed continues hiking for longer investors still feel they'll be compensated.

Optimism may be building that the Fed is poised to steer the economy toward a soft landing, but Treasury market has delivered what is widely understood as a starkly different message: The economy is veering toward a contraction.

Regional and consumer lenders subject to increased oversight will probably issue at least $15 billion of bonds over the remainder of the year and $44 billion maturing from this group through the end of 2024.

Among the winners: Hedge funds betting that bond yields will rise anew. It's clear that Jackson Hole's hawkish message has been received loud and clear.

Some are pondering the implications of whether there has been an increase in the neutral rate, also known as R*, the theoretical level at which rates neither stimulate nor restrict an economy.

The key to the trade is that the instruments, worth about $20 billion in all, are pegged to the now-defunct London interbank offered rate, or Libor.

Traders also weighed a US government report saying that job growth in the year through March will probably be revised down by 306,000 — a smaller adjustment than some economists expected.

The strategy of loading up on government bonds this year in a bold bet that would atone for the punishing losses suffered in 2022 is misfiring once again.

The sale marks the firm's first operating company-level debt sale in about four years.