BlackRock's Rick Rieder: Back end of the yield curve has felt a bit untethered recently

Summary

Rick Rieder discusses the recent pressure on the long end of the Treasury curve, attributing it mainly to heavy pending Treasury supply and financing. He argues Treasury and Fed officials are now watching long-end rates and have room to manage the curve, making the intervention more statement than large operation but still enough to cap yields and pressure crowded short-back-end trades. He also covers Fed communication, restrictive housing policy, and why the Fed is unlikely to hamper AI capex.

• Long-end Treasury yields have felt untethered recently.
• Heavy Treasury financing and issuance is the main supply pressure on long-end rates.
• Treasury's action after the yen intervention signals attention on long-term interest rates.
• Rieder says the intervention is not huge in duration but is significant as a statement.
• The policy signal may cap long-end yields and pressure crowded curve-steepener trades.
• Fed communication should focus on the reaction function rather than the dot plot or more forward guidance.
• Fed policy is restrictive on housing but unlikely to hamper AI capex spending.
• Services are driving current inflation while goods inflation is largely absent.