30-Year Bonds: A Canary in the Coal Mine

May 15, 2015 12:00 PM
30-Year Bonds: A Canary in the Coal Mine

Followers of global financial markets anticipate change in light of recent fluctuations in the 30-year bond market. That’s according to Gregg Hunt, trader.

Power Hour Noon Logo“We’ve already seen the 30-year bond market over the last couple of weeks really change its behavior and act rather weak, meaning yields going up compared to the 10s, 5s,” Hunt tells the “AgDay” Agribusiness Update segment for Thursday, May 14, 2015. “You’ve got zero on 4-year T-bills just the other day. That 30-year’s going to be like the canary in the coal mine, so to speak. … We’re starting to see that 30-year bond really start to act erratic.”

The dollar has shown signs of weakening over the past six weeks, Hunt points out.

“The trade was probably way, way too crowded, way too many people involved on the short side,” Hunt notes. “But over years watching that currency market, it’s a really good trending market, and there’s probably another at least one big leg if not two legs down before it runs its course.”

Meanwhile, in the larger context of history, several factors explain the strengthening dollar, which has put a lid on U.S. agricultural exports.

“Since 2008, there’s about $8 trillion of bonds that were issued on the world market by foreign corporations and foreign governments,” Hunt explains. “They issued it in dollars but it went into their local currency. So they’ve got to service that money in dollars. So there’s a tremendous overhang of why this dollar will keep getting stronger. The other reason would be that we’re going to raise interest rates before anybody else, that’s just a given.”

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Spell Check

Chappell, NE
5/16/2015 08:54 AM

  It's simple, farm dollars are extremely strong when selling grain, extremely weak when buying anything else.

Andy Juris
Bickleton, WA
5/15/2015 11:07 PM

  The dollar might go up.......or it could go down. He should have been a weather forecaster.

New Franklin, MO
5/15/2015 07:57 PM

  Am I the only one confused by this article? What do the 30 year bonds tell us? Signs of dollar weakening and signs of dollar stronger. What is point of article?


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