The most important charts for the next few weeks
With the US—Israeli joint attacks on Iran going horribly wrong, there are two conclusions. First, that inflation is going to be a major problem. Second, foreigners will sell US treasuries.
Our first chart looks at US Treasury yields in the light of the inflation shock from the closure of Hormuz.
Already the majority of G7 bond yields have broken out on the upside and given the emerging inflation outlook the US 10-year note is bound to as well. The destruction to government finances is such that foreigner investors as well as growing numbers of investment professionals in America will diagnose a debt trap. The yield closed on Friday at 4.44%. A move towards 5% and through it will fully confirm this outlook.
According to the US Treasury’s TIC figures, the table below shows investments of the principal Gulf states in US financial securities:
