[채권] U.S. Treasury yields fall amid ‘risk-off’ concerns over Omicron fluctuations

[뉴욕=뉴스핌] Correspondent Kim Min-jung = US Treasury yields fell on the 30th (local time). Investors bought bonds as the COVID-19 omicron mutation once again strengthened the preference for safe assets.

However, after Federal Reserve Chairman Jerome Powell hinted at the possibility of tapering (reducing asset purchases) next month, some of the decline in Treasury yields has returned.

According to the New York bond market, as of 4:03 p.m. eastern time in the US, the 10-year US Treasury yield fell 9.0 bp (1 bp = 0.01 percentage point) to 1.439% from the previous day. Bond interest rates move inversely with prices.

In the intraday, the 10-year yield fell to 1.419%, a three-week low, but raised the level somewhat after Chairman Powell’s remarks.

The 30-year bond fell 8.6bp to 1.794%, and the 2-year bond rose 3.9bp to 0.549%.

The fear of the Omicron mutation dominated the financial markets today. Moderna (MRNA) Chief Executive Officer Stefan Bangsel, in an interview with the Financial Times (FT), made the market uneasy by saying that the existing COVID-19 vaccine could be less effective against the Omicron mutation. Amidst such uncertainty, investors flocked to bonds, which are safe-haven assets.

“The remarks by President Moderna that a vaccine could be less effective are moving the market,” Lynn Graham-Taylor, senior interest rate strategist at Rabobank, told Reuters.

Federal Reserve Chairman Jerome Powell. 2017.11.28 [사진=로이터 뉴스핌]

However, as Chairman Powell’s hearing progressed, the 10-year yield partially reversed its decline and the 2-year yield turned upward.

Chairman Powell said the US economy is currently strong and inflationary pressures are rising and it is appropriate to consider closing the tapering months early.

Chairman Powell also expected to discuss such a plan at a regular meeting of the Federal Open Market Committee (FOMC) to be held on the 14th-15th of next month.

Earlier, Chairman Powell said the Omicron mutation “posed a downside risk to employment and economic activity” and explained that uncertainty surrounding inflation has also increased.

In markets that expected the Fed to withhold tapering expansion due to uncertainty about the omicron mutation, Powell was more hawkish than expected.

After Chairman Powell’s remarks, the market also strengthened expectations for a rate hike next year. According to CME FedWatch, the forecast for a 25 basis point rate hike in March next year rose to 26% from 18% the previous day, and the likelihood of a May hike rose to 38% from 30% the previous day.

Ben Jeffrey, interest rate strategist at BMO Capital Markets, told Reuters that “Powell is far more hawkish than many market participants expected, despite the risk of omicron mutations.” It seems to reflect that the normalization of monetary policy may be achieved sooner than previously expected,” he said.


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