Macro Insights Weekly: What to make of the US treasury selloff

2 October 2023


  • The treasury market sell-off has coincided with easing core inflation and stricter control on US government spending. This vexing development is putting broader asset markets at risk.
  • US core inflation continues to ease, although rising oil has made the headline inflation sticky.
  • Between shutdown posturing and expiration of pandemic-era support, fiscal slippage isn’t a concern.
  • Yet, bond yields rose sharply last quarter. This can readily spill over into spreads.
  • A sharp repricing raises the risk of economic pain and financial instability.
  • Hopes of a soft landing in 2024 may well be dashed.