Another look at long term rates/Taiwan/Brian Cornell gave some good macro color, as did some others/Sentiment

In still trying to figure out the main driver of this increase in long term interest rates, lets take another angle. On July 26th, the Federal Reserve gave us its last rate hike to the range of 5.25-5.50% but the market on that closing day was pricing in that they would be reversing themselves notably by the end of 2024. On that day, the December 2024 fed funds futures was yielding 4.155%. Also on that day, the 10 yr Treasury note was yielding 3.87%. Today, that contract is yielding 4.485% and the 10 yr yield is at 4.50%. Also, this 10 yr yield rise comes as on that day in July, the 10 yr inflation breakeven closed at 2.37% vs 2.32% right now. Economically, core CPI has moderated from 4.7% in July, seen a few weeks after that Fed meeting vs the 4.0% we saw for October a few days ago. And, the October payroll saw a job gain of 150k vs the July one at 236k, seen just a week after the rate hike and continuing claims totaled about 1.7mm then vs 1.834mm now. 

So, while the December 2024 fed funds futures contract is now pricing in about 3 rate cuts vs about 4+ in July, and trading 33 bps above where it was in July, the 10 yr yield is higher by 63 bps since then even though inflation has further moderated and job growth is proving to be slowing. Thus, excessive US debts and deficits and the Treasury supply that triggers, along with missing the big buyers such as the Fed, foreigners (as  % of issuance) and banks at the same time the BoJ further widened YCC and global QT elsewhere continues on, are all really big factors driving long rates. To make my point on this again.

I could be wrong but I thought the Bloomberg News story I saw very early yesterday morning that "Taiwan's opposition parties have agreed to run a joint campaign in January's election, raising the chances that a more China friendly government takes power in Taipei" was a really big deal. That the KMT and Taiwan People's Party coalition could now win and the KMT's desire to have detente with China is part of their essential platform, that would dramatically lower the odds of any military conflict for a while to grab Taiwan kinetically, I would think.