Major: Treasury Market Is Functioning Normally

• Treasury market is functioning normally, with moves reflecting shifting Fed rate expectations, not US credit risk.
• Empirical evidence contradicts the thesis of a US fiscal breakdown, as swap spreads are not widening.
• Global yields are rising across major economies (Japan, UK, Australia, Germany, France) due to policy rate shifts.
• Persistently high oil prices could force central banks to tighten further.
• The US dollar could decline against other currencies if the US economy cools amidst structural and political issues.
• Geopolitical anxiety is now a 'new normal' that markets have adjusted to.

Steven Major discusses the global bond selloff, attributing it to shifting interest-rate expectations rather than US Treasury market dysfunction or fiscal stress. He highlights that higher oil prices could lead to further central bank tightening and notes potential risks to the dollar if the US economy cools. Major also suggests that geopolitical anxiety has become a 'new normal' for markets.