With the intensification of hawkish policies of central banks such as the Federal Reserve, the price of US debt continued to plummet, and the yield of US debt hit a new high for many years.

On September 22nd, US Eastern Time, the yield of two-year US bonds hit 4. 163%, the highest since June 2007 10. The yield of five-year US bonds hit 3.942%, the highest since June 2007 1 1, and the yield of 10-year US bonds jumped to 3.7 16%, the highest since February 201. The yield difference of 2-year/10-year bonds once reached 58 basis points, which was the most serious inversion in at least 20 years. On September 23, US bond yields rose again.

Zhaowei, chief economist of Guo Jin Securities (600 109), told the reporter of 20th Century Business Herald that, considering that the formation mechanism of this round of inflation is very different from the past, the liquidity is too loose, which leads to a more urgent start of supply-side leading decision-making, a slower decline, and a slower tightening of monetary policies in the US and Europe. For the market, the core concern in the future will switch to the end-point interest rate level, and the policy will shift to the point-in-time forecast. After the September meeting, the market not only revised the Fed's final interest rate forecast from 4.25-4.5% to 4.5-4.75%, but also postponed the policy shift from June to July 2023.

In addition, the inflation problem is more stubborn than previously expected. Lu Zhe, chief economist of Debon Securities, told the reporter of 2 1 Century Business Herald that we believe that the viscosity and diffusion of current inflation mean that the duration of high inflation will be lengthened, which means that the deep-seated risks of inflation still tend to rise, and the market's expectation of the Federal Reserve's imminent tightening of goods administration has not been fully taken into account. At the same time, the problems facing the supply side are structural, not cyclical. Although there is marginal improvement in short-term aggregate supply, the contraction of aggregate supply is either medium-term or long-term.

(The average interest rate of 30-year fixed mortgage in the United States has climbed to 6.29%, the highest since June 2008, when it was 65438+ 10. Vision china (00068 1))

The wave of interest rate hikes by global central banks is enormous.

Driven by the ultra-hawkish Federal Reserve, the wave of interest rate hikes by the central bank has intensified.

On September 2 1 day, the Federal Reserve raised its benchmark federal funds rate by 75 basis points to 3%-3.25%. This interest rate decision was interpreted by the market as an extreme hawk, and the Fed policymakers' forecast for the interest rate level at the end of this year was also greatly raised to 4.4%. At the remaining two meetings this year, the Fed will need to raise interest rates by another 65,438+0.25 basis points.

SeemaShah, chief global strategist of the letter security ball investment company, said: "The Fed is planning a hard landing, and a soft landing is almost impossible. Powell admitted that economic growth will be below the trend level for some time, which should be interpreted as the central bank talking about economic recession. From now on, the situation will become more severe. "

As the Federal Reserve continues to raise interest rates, the fiscal deficit faced by the federal government will be further aggravated in the next few years. According to the forecast of the responsible Federal Budget Committee (CRFB), the interest rate increase announced this week alone will increase the government deficit by $ 2. 1 trillion in the next decade.

Today, the total debt level of the United States has expanded to about 120% of GDP. As interest rates rise, the borrowing cost of the US federal government's $30.89 trillion debt will also rise. CRFB had previously predicted that in the next few years, debt interest payment itself would become the fastest growing part of the federal budget.

After the Fed raised interest rates, many central banks around the world followed the pace of the Fed and took radical measures to raise interest rates, which further aggravated the sell-off in the US debt market. Less than a day after the Fed's interest rate decision in September, no less than seven central banks in Asia, Europe and Africa chose to raise interest rates, not including those that linked monetary policy to the Fed.

More symbolically, on September 22nd, the Swiss National Bank raised the interest rate from -0.25% to 0.5% as expected. Since then, all European central banks have separated from negative interest rates, marking the end of the era of negative interest rates in Europe.

Behind the soaring US bond yields, many US bond traders are also worried about the measures taken by countries to intervene in exchange rates to defend their currencies. Some people worry that Japan may sell American debt to raise the dollars needed to buy its own currency. On September 22nd, the Bank of Japan intervened in the market to buy yen for the first time since 1998. Japan is the "largest creditor in the United States" with US debt as high as 1.2363 trillion US dollars.

However, there are also views that Japan will not sell US debt substantially in the short term. The Bank of Japan has more than110 billion dollars in the foreign and international monetary authority repurchase pool of the Federal Reserve, and Japan may only be able to sell American bonds after these cash are exhausted.

BlakeGwinn, head of US interest rate strategy at RBCCapitalMarkets, said: "The Bank of Japan will first consider using the cash in the reverse repurchase pool because there is no cost. If the Bank of Japan chooses to sell US debt at this point in time, it will suffer financial losses. "

10-year US bond yields may have limited room for growth.

It should be noted that while the Federal Reserve vigorously raises interest rates to push up the yield of US bonds, the risk of economic recession is also rising sharply.

In fact, even the Federal Reserve itself has admitted the possibility of recession. Powell said at the news conference after the interest rate decision this week, "We always think it is very challenging to achieve a soft landing while restoring price stability. We don't know whether raising interest rates will lead to economic recession. If monetary policy is to be tightened for a long time, the possibility of a soft landing will also be reduced. Our purpose is to reduce inflation. "

On a larger scale, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), also said on September 22nd that the global economic outlook is "bleak" this year, but the situation in 2023 may be even more severe unless central banks can control inflation.

Although the ultra-hawkish policy of the Federal Reserve has led to a continuous surge in the yield of 10-year US bonds, the ensuing worries about economic recession are also limiting the upside in the future. Lu Zhe believes that in the short term, the combination of austerity and recession logic acts on the US bond interest rate transaction of 10, which means that its high volatility trend will continue. Although the interest rate of 10 US bonds exceeded the previous high of 3.50%, considering the amplification of the recession logic in time and space, it is difficult for 10 US bond interest rate to bring about a new round of central rise.

For the future, Zhao Wei predicted that in the next two quarters or so, the external market will continue to fluctuate at a high level, the economic level will be in a sensitive stage from stagflation to recession, and the stability of policy expectations will be relatively poor. Leading indicators show that overseas economies have entered the "recession" window or at the turn of winter and spring. Considering that the timeliness and effectiveness of "bottom-up" of monetary finance will also be greatly weakened, the degree of "recession" overseas in the future may be underestimated. Under the tightening cycle, the "reversal" of corporate leverage behavior is the main risk consideration, and the possibility of "crisis" recession cannot be ruled out. Taking history as a mirror, in the process of entering recession, there is still great adjustment pressure in overseas markets, and this round may be no exception.

In Lu Zhe's view, if the Fed wants to defend its promise of price stability, it must restore the balance between supply and demand before the outbreak. Under the background that the total supply is unlikely to be completely repaired, what the Fed should do is not only to reduce the total demand to the pre-outbreak level, but also to make it lower than the pre-outbreak level.

Under the tightening tide, the US mortgage interest rate approaches 6.3%.

As the "anchor of global asset pricing", the recent increase in the yield of 10-year US bonds has also driven the rising interest rate of US mortgage loans.

On September 22nd, the survey of lending institutions released by FreddieMac, the financial giant of American housing mortgage, showed that the average interest rate of 30-year fixed mortgage in the United States had climbed to 6.29%, the highest level since June 65438+ 10.

Higher interest rates will affect almost every corner of the economy, but the impact on housing is particularly serious, and the monthly supply of just-needed buyers will increase by hundreds or even thousands of dollars.

At the same time, the real estate market in the United States is also obviously cooling down. Although house prices continue to record year-on-year growth, prices are declining month by month, and the soaring mortgage interest rate has deterred many potential buyers.

According to the data released by the National Association of Realtors (NAR) on September 2 1, the total sales of existing homes in the United States fell for the seventh consecutive month, reaching an annualized rate of 4.8 million units, setting a new low since May 2020. In addition, the median price of existing homes in August rose by 7.7% year-on-year to $389,500, the smallest increase since 2020. In contrast, in June this year, the median price of existing houses once reached an all-time high of 4 1.38 million US dollars.

Although high interest rates and high housing prices have curbed demand, the inventory problem is still expected to support housing prices, and it is unlikely to fall sharply. LawrenceYun, chief economist of NAR, said, "Inventory will remain tight in the coming months or even years. Some homeowners are reluctant to sell after locking in the mortgage interest rate, which has been at a historically low level in recent years, which has increased the demand for more new houses. We have not seen an increase in net inventory. "

An unfavorable signal is that although the overall housing market in the United States has cooled down, the rental market is in full swing. According to the data released by Zumper on August 29th, the median monthly rent of a newly listed one-bedroom apartment in the United States is $65,438 +0.486, which is 1.8% higher than that in August 20021year, and also exceeds the historical high reached in July this year. More than half of the cities in the United States have double-digit rent increases, and some cities have increased by more than 30%.

For the Fed, it is obvious that it does not want to see the rental market so "hot". Housing cost is the largest component of CPI in the United States, accounting for about one-third of the weight. Housing costs often become an important indicator for the Federal Reserve to decide the path of raising interest rates. As more leases expire and reflect higher market prices, rents may have more room to rise in the coming months, and the tightening pressure of the Fed will remain great.