Oil prices fall below 100 yuan+Besent calls out, U.S. Treasury yields retreat from 2002 highs
U.S. Treasury yields have retreated from their highest levels since 2002.
According to Zhihui Finance APP, U.S. Treasury yields have retreated from their highest levels since 2002, as oil prices fell below $100 per barrel and U.S. Treasury Secretary Scott Besant insisted that the government debt burden is manageable. The yields on 10-year and 30-year U.S. Treasury bonds dropped by 3 and 4 basis points, to 5.27% and 5.63% respectively, while the 2-year yield remained largely unchanged. On Tuesday, oil prices declined as signs emerged that more crude oil is being supplied through the Strait of Hormuz.
This signals a pause in the global bond market sell-off, which previously continued due to concerns over inflation triggered by conflict between the U.S. and Iran, and a rising expectation of further monetary tightening by the Federal Reserve.
Besant attempted to reassure investors, stating that a combination of economic growth and spending restrictions will “soon” begin to change the U.S. government’s borrowing trajectory. In a fireside chat in Pennsylvania on Monday evening, he said the government would start “reversing this trend.”
Voices of Doubt: Deficit Unsolved, Reassurance Falls Short
Nevertheless, the market remains skeptical of Besant’s statements and is reluctant to declare that the bond market sell-off has ended.
Macquarie strategist Gareth Berry commented: “Given the deficit is as high as 6% and there are no plans to cut the deficit, the market may remain very doubtful. Speaking about targets is not the same as having a plan.”
Schroders fund manager James Ling said he is focused not only on crude prices. “To see a meaningful rebound across the entire curve, the primary condition is for energy prices to start falling,” he said. “It’s not just about crude oil prices, but also refined product prices.”
Additionally, Bridgewater founder Ray Dalio warned that the U.S. is approaching the limit of the debt cycle and, if spending continues to exceed earnings, may face a crisis within three years. He said U.S. Treasuries are vulnerable to decreased demand from China and Japan (the two largest foreign holders of U.S. debt).
However, HSBC strategists believe the market’s bet on roughly 80 basis points of Federal Reserve rate hikes by 2027 is “excessive,” but they still maintain that the yield spread between 5-year and 30-year U.S. Treasuries will widen. HSBC U.S. rates strategist Dheeraj Narula wrote in a report: “We believe that surging volatility, combined with historical data showing a lack of clear technical resistance at these levels, has led many investors to adopt a wait-and-see stance, although the appeal of higher long-term yields is increasingly evident.”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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Updated version 2 - McKesson and CD&R will privatize infusion therapy service provider Option Care in a $5.8 billion deal.
Reuters, October 6 – Pharmaceutical distributor McKesson (MCK.N) and private equity firm Clayton Dubilier & Rice (CD&R) reached an agreement on Tuesday to take infusion therapy provider Option Care Health (OPCH.O) private, in a deal valued at approximately $5.8 billions, including debt. The acquisition offer of $32.05 per share represents a 37.1% premium over Option Care's most recent closing price. As a US pharmaceutical distributor, McKesson is seeking to expand its healthcare services portfolio, and this transaction marks its latest move. It also follows the private equity fund’s previous acquisition of another home health service provider, Enhabit. Option Care Health is the largest independent provider of infusion therapy services in the US, serving over 308,000 patients annually through more than 197 service centers, offering home and outpatient infusions, specialty pharmacy, and care for complex conditions. With an aging population and a growing number of patients choosing care outside costly hospital settings, demand for home healthcare in the US continues to increase. Upon closing, CD&R will hold the majority stake, while McKesson will retain a minority interest. Option Care Health will continue to operate as an independent company led by its existing management team. As per transaction terms, McKesson will invest about $1.4 billions to acquire a 49% stake, with the right to acquire CD&R's remaining 51% interest at a later date. According to Michael Cherny, an analyst at Leerink Partners, this deal positions McKesson in line with the trend of healthcare services shifting away from hospitals and medical institutions to alternative sites of care. Additionally, given McKesson’s current operation of Canada’s leading infusion and injection network, Inviva, the transaction extends its reach in the US home infusion market. McKesson’s oncology and multi-specialty business segments, including infusion services, posted revenues of $14.2 billions in the most recent quarter, up 33% year-over-year, benefiting from specialty drug distribution and contributions from acquisitions. The deal is expected to close in the first half of 2027, after which Option Care Health will become a private company.
The Bank of England's most hawkish official: The labor market is "stationary" rather than loose, and inflation is deeply entrenched.
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BUZZ - Bank of America gives Diodes a "Buy" rating, driving its stock price up
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