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The ongoing selloff in bonds.

Wall Street hit by hawkish bets. Photo: Michael Nagle | Bloomberg

Danger zone | The world’s biggest bond market extended this month’s selloff after solid economic readings and hawkish comments from Federal Reserve officials reinforced speculation that interest rates will be higher for longer. Treasuries fell across the curve, pushing 10-year yields up to around 4.63%. To Vanguard, the market is nearing levels that risk triggering a large selloff. “We are in a danger zone right now,” Ales Koutny, Vanguard’s head of international rates, said in an interview. Even a small move higher — past the critical 4.75% level — could force investors to abandon their bets on a rally, giving way to a wave of selling that could push yields toward the highs of 2007, he said. US Equities meanwhile slid for a fifth straight session on Thursday.

Private warning | Moody’s Ratings this week gave investors greater reason for concern about credit quality in the $1.7 trillion private credit sector. The ratings firm reduced its outlook for direct lending funds managed by BlackRock, KKR, FS Investments, and Oaktree Capital Management to negative from stable. These funds, which manage over $20 billion in assets, have seen an increase in loans on non-accrual status, indicating potential financial losses. While the funds retained their investment grade rating, the change to a negative outlook marks the first such move by Moody's in private credit since 2020.

Up & coming | Voting is set to get underway on Friday in India, where nearly a billion people are eligible to cast ballots and hundreds of political parties are participating. It won’t be a speedy affair though, with the election set to run for about seven weeks. More immediately, investors in Asia are likely to be focused on fresh consumer-price inflation readings for Japan. Economists surveyed by Bloomberg see the headline rate holding at 2.8% year-on-year, with a slight slowdown in measures that strip out fresh food and energy. That would still be well above the Bank of Japan’s targets though, and would likely do little to disrupt officials’ push toward policy normalization.

Some hedge funds too-big-to-fail for bond market, IMF says

A small group of funds has accumulated such large short wagers in the Treasury market that they could destabilize the broader financial system during times of stress, according to the International Monetary Fund. “A concentration of vulnerability has built up, as a handful of highly leveraged funds account for most of the short positions in Treasury futures,” the IMF said in its Global Financial Stability Report released this week. “Some of these funds may have become systemically important to the Treasury and repo markets, and stresses they face could affect the broader financial system.” (Bloomberg Law | Apr 18)

US deficit poses ‘significant risks’ to global economy, warns IMF

The IMF has warned the US that its massive fiscal deficits have stoked inflation and pose “significant risks” for the global economy. The fund said in its benchmark Fiscal Monitor that it expected the US to record a fiscal deficit of 7.1 percent next year — more than three times the 2 percent average for other advanced economies. The US and China were among four countries the fund named that “critically need to take policy action to address fundamental imbalances between spending and revenues.” The others were the UK and Italy. (Financial Times | Apr 17)

Vix ‘fear gauge’ soars on Middle East tensions and interest rate shift

Volatility index at highest since October as investors step up protection against downside risk to equities. US investors are paying the biggest premiums since October to protect their portfolios against market gyrations as mounting tensions in the Middle East and reduced expectations of interest rate cuts fuel a surge in volatility. The Vix index, Wall Street’s so-called fear gauge, hit 19.6 this week, its highest level since October 20, two weeks after the Hamas attack that triggered Israel’s war in Gaza. (Financial Times | Apr 17)

Powell dials back expectations on rate cuts

Firm inflation during the first quarter has called into question whether the Federal Reserve will be able to lower interest rates this year without signs of an unexpected economic slowdown, Chair Jerome Powell said Tuesday. His remarks indicated a clear shift in the Fed’s outlook following a third consecutive month of stronger-than-anticipated inflation readings, which derailed hopes that the central bank might be able to deliver pre-emptive rate cuts this summer. (The Wall Street Journal | Apr 16)

The SEC is watching you

The Securities and Exchange Commission is deploying a massive government database — the Consolidated Audit Trail, or CAT — that monitors in real-time the identity, transactions, and investment portfolio of everyone who invests in the stock market. As SEC Commissioner Hester Peirce describes it, by allowing the commission to “watch investors’ every move in real-time,” CAT will make it easier to investigate insider trading or market manipulation. But as a lawsuit being filed Tuesday in Texas federal court makes clear, CAT crosses a constitutional red line. (The Wall Street Journal | Apr 15)

Photo: Getty Images

SEC targets its own staff messaging apps

The US Securities and Exchange Commission has blocked third-party messaging apps and texts from employees’ work mobile phones, bringing its own practices closer to the standards it’s enforcing for the industry. SEC scrutiny prompted Wall Street to overhaul how employees communicate on business matters using mobile phones. Meanwhile, the SEC took a hard look at policies covering its own staff’s communications on agency-issued phones. The agency has restricted access to third-party messaging applications, as well as SMS (short message service) and iMessage texts.

— Bloomberg Markets

Microsoft, beset by hacks, pledges to overhaul cybersecurity

The world’s largest seller of cybersecurity products has a problem with its own cybersecurity. In recent years, Microsoft Corp. has been hit with a series of embarrassing hacks that have exposed corporate and government customers. Earlier this month, the US Cyber Safety Review Board issued a scathing report documenting the company’s inability to stop hackers tied to the Chinese government from pilfering the email boxes of US officials. The report’s authors called on Microsoft to institute urgent reforms.

— Bloomberg Technology | Cybersecurity

Cyber investigators worry ransomware attacks may worsen as young, western hackers work with Russians

In the past year — hospitals, pharmacies, tech companies, Las Vegas' biggest hotels and casinos have been paralyzed by "ransomware" attacks, in which hackers break into a corporate network, encrypt, or lock up critical files and hold them hostage until a ransom is paid. It's a crime that has been growing more costly and disruptive every year. Now cybersecurity researchers fear it's about to get worse, with the emergence of an audacious group of young criminal hackers from the US, UK, and Canada the FBI calls Scattered Spider. More troubling, they have teamed up with Russia's most notorious ransomware gang.

— CBS News

“I’ve seen tons of rich people, billionaires come through and say, ‘Oh, I’ll join, how much is it, $20K, $50K, $100K, a million? I don’t care, I’ll join.’ And that’s like the quickest way to not get invited.” — New York Vintners member Timothy Parks.

Exclusive NYC wine club requires a vibe check and $20K to become a member, drink with celebs

This is New York Vintners, an exclusive Tribeca wine club where members pay a $20,000 initiation fee — but celebs can sashay in for free. What began as an online retail wine store in 2006 transformed four years ago into a social club for around 70 wine high-rollers who conquered an admission process based on “vibes” and bested the “no a-holes” policy.

— New York Post

Spying on your home from the sky

Companies are using drones to check out roofs or to spot yard debris and undeclared trampolines. Across the US, insurance companies are using aerial images of homes as a tool to ditch properties seen as higher risk. Nearly every building in the country is being photographed, often without the owner’s knowledge. Companies are deploying drones, manned airplanes, and high-altitude balloons to take images of properties. No place is shielded: The industry-funded Geospatial Insurance Consortium has an airplane imagery program it says covers 99% of the US population. 

— The Wall Street Journal

The rise of the bee bandits

The foundational story of the modern American West is riven with tales of animals slaughtered or plundered: bison gunned down by the million, wolves cast out, horses purloined, cattle rustled. Today, a rather different flavor of animal crime has become ascendent — the theft of bees. This insect odyssey ensures paydays for often struggling beekeepers, the production of most of the world’s almonds, and increasingly, an opportunity for enterprising thieves.

— NOEMA