Bonds

The Wall Street bank recently shifted its bond recommendation to neutral from underweight — for the first time since June 2020 — though has so far stopped short of an overweight call.

On Nov. 7, voters will consider a whopping $2.8 billion bond package, including $94 million for a new 8,000-seat venue that could be the costliest in Texas history.

At HSBC Holdings Plc, Steve Major says he was "wrong" to assume the U.S. government's growing supply of bonds didn't matter, and Morgan Stanley finally joined Bank of America and moved to a neutral position on Treasuries.

While the selloff abated on Wednesday, traders are on high alert for a resurgence in volatility — especially if U.S. non-farm payrolls data on Friday come in stronger than expected.

After the salvo of central bank decisions last week, traders are increasingly concerned that rising oil prices risk fanning inflation, which will make it difficult for policymakers to reduce rates anytime soon.

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.