On Wednesday, the auction results for the new 20-year U.S. Treasury bonds were weak. The Treasury issued $16 billion in bonds with a winning yield of 4.680%, the highest since April, and above the pre-auction trading level of 4.650%. This result reflects weak market demand, with the proportion of direct bidders hitting a historic low of just 7.9%, while indirect bidders' proportion rose to 69.5%. The bid-to-cover ratio was 2.34 times, below the recent average of 2.52 times. The primary dealers' allocation proportion was 22.6%, the highest since 2021. Long-term Treasury yields subsequently rose by 1.4 basis points, with a slight widening of the yield spread.
Fed Officials Express Divergent Views on Economic and Policy Outlook
Federal Reserve Governor Cook stated that if the recent high productivity continues, the U.S. economy may enter an "extremely important" turning point. This high productivity could drive economic growth without sparking inflation. She emphasized that productivity growth driven by innovation has significant potential, but sustaining this trend long-term remains challenging.
Meanwhile, another Federal Reserve Governor, Bowman, expressed concern about progress toward the inflation target. She noted that despite policy adjustments, inflation remains above the 2% target, and the current rate cut progress may be too cautious. She stressed the need for a higher neutral policy rate and indicated that the Federal Reserve should not rush into another rate cut.
Bank of England Focuses on Economic Uncertainty and Rate Cut Pace
Bank of England Deputy Governor Ramsden said in his speech on Wednesday that if economic uncertainty in the UK dissipates in the coming months, he would support faster rate cuts. He also expects the UK economy to continue towards "low and relatively stable inflation." However, recent data shows that UK inflation is rising faster than expected and far exceeds the 2% target, which may affect the pace of future policy adjustments.
Port Import Surge and Inventory Changes Attract Attention
In October, the Port of Los Angeles saw imports nearing a record high, reaching 462,740 TEUs, reflecting businesses rushing to import before potential tariff hikes, while avoiding labor disruptions at alternative ports. The nearby Port of Long Beach also handled nearly 1 million containers, setting a new record. This indicates the continuing impact of trade flows on the economy.
Additionally, U.S. Strategic Petroleum Reserve inventories continued to grow, reaching the highest level since November 2022 for the week ending November 15. Meanwhile, gasoline inventory growth was the largest since September 2024, and commercial crude oil inventory reached the highest since August 2024. The growth in inventory data reflects the complex dynamics of the energy market and provides a multi-layered impact on crude oil prices.
Outlook
Overall, weak bond auctions, differing policy expectations among officials, and intertwined energy and trade data add complexity to market prospects. Investors need to closely monitor policy dynamics and economic indicators to assess future trends.
