Core Viewpoint - Pressure on long-dated bonds is easing globally as investors respond to supply changes and seek bargains following a recent selloff [1] Group 1: Yield Changes - Yields on 30-year US bonds have decreased by approximately 25 basis points since early September, while UK gilts have dropped by 20 basis points and Japanese bonds have fallen nearly 15 basis points [2] - This decline in yields has reversed a significant selloff that previously pushed Japan's long-dated yields to an all-time high and UK gilts to their highest level since 1998 [2] Group 2: Supply Changes - The easing pressure on long-dated bonds is partly attributed to a reduction in long-end supply, with Japan's finance ministry proposing to cut issuance of long-dated debt in upcoming auctions [3] - The Bank of England is also reducing the share of long-end bond sales in its quantitative tightening program starting next month, and Australia's debt manager has indicated it may consider reducing ultra-long bond issuance [3] Group 3: Market Sentiment - The shift in supply dynamics is prompting a reevaluation among investors, with TS Lombard strategists noting that supply "fixes" are creating buying opportunities in the UK and Japan [5] - The change in sentiment regarding long-end bonds has also influenced the US market, leading strategists at Citigroup and Bank of America to withdraw recommendations that longer-term Treasuries would underperform [5] Group 4: Economic Outlook - The recent optimism about long bonds highlights how supply concerns were a significant factor in the previous selloff, despite broader fears of increasing fiscal deficits [6] - An economist from TS Lombard suggests that the rise in 30-year yields globally is not indicative of an "imminent fiscal apocalypse," but rather a result of declining demand from pension funds and insurers, along with central bank quantitative tightening [7] Group 5: Federal Reserve Influence - In the US bond market, concerns regarding the independence of the Federal Reserve contributed to pushing 30-year yields close to 5% earlier in the month [8] - However, a recent near-unanimous policy decision by the Fed has alleviated these concerns, leading Citi's rates strategists to recommend clients take profits on bets that 30-year interest-rate forwards will underperform compared to five-year tenors [8]

Core Viewpoint - The dismissal of Federal Reserve governor Lisa Cook by President Trump over alleged mortgage fraud has led to market volatility, raising concerns about the independence of the Federal Reserve and its implications for monetary policy [1][6][7]. Market Reactions - Stock markets and bonds experienced a sell-off following the announcement, with US government bond yields rising, particularly the 30-year bond which surpassed 5.6%, nearing a 27-year high [3]. - The dollar initially dropped nearly 0.4% but largely reversed this decline, while gold prices spiked by 1% and maintained most of the overnight gain [4]. Federal Reserve Implications - Cook's potential dismissal would create another vacancy on the Federal Reserve board, which Trump is expected to fill with an economist favoring interest rate cuts [3]. - The current situation raises concerns about "intensifying fiscal dominance risks" within the Federal Reserve, as noted by Deutsche Bank forex strategist George Saravelos [7]. Independence of the Federal Reserve - Analysts suggest that Trump's actions may undermine confidence in the Federal Reserve's independence, which is crucial for maintaining transparent and rules-based capital markets [6]. - The attempted removal of Cook is described as unprecedented, potentially signaling the end of central bank independence in the US [7][8].