US Treasury bond prices experienced a mixed trend on Friday, as the tightening policy of the US Federal Reserve (Fed) is expected to be prolonged. After reaching their highest level in several years, US Treasury yields showed a slight easing ahead of the weekend.
According to data from Yonhap Infomax, as of 8:45 a.m. on the 22nd (US eastern time), the 10-year Treasury bond yield in the New York bond market was trading at 4.474%, down 0.30bp from the previous trading day at 3 o’clock. Meanwhile, the 2-year yield, which is sensitive to monetary policy, dropped by 3.00bp to 5.118%, and the 30-year government bond yield increased by 0.30bp to 4.560%.
The gap between 10-year and 2-year bonds narrowed from -67.1bp to -64.4bp. It is important to note that government bond yields and prices move in opposite directions.
With the US economy performing well and inflation not expected to easily fall to the 2% target level, it is anticipated that the tightening cycle of the US Federal Reserve will be prolonged. Some experts even predict that interest rates will remain high and the anticipated interest rate cut, which was expected to begin in the middle of next year, will be pushed back.
However, expectations for an interest rate hike in November this year are not gaining much traction yet. According to CME Group’s FedWatch tool, federal funds rate futures reflect a 72.6% chance that the Fed will keep rates unchanged in November, with only a 27.4% probability of a 25bp increase.
The probability of an interest rate hike in December has not increased significantly either. In December, there is a 57.7% chance of an interest rate freeze and a 36.7% chance of a 25bp increase. The market is waiting for further confirmation, especially considering indicators such as the September employment indicator and the consumer price index (CPI), as well as comments from Federal Reserve officials.
One notable event to watch is the scheduled speech by Federal Reserve Board Director Lisa Cook this afternoon. While expectations for prolonged tightening by the Federal Reserve are high, the recent increase in oil prices and concerns about the federal government shutdown on October 1 are other variables that could impact the market.
US Treasury yields have seen a small decline after reaching their highest point in several years. The 10-year Treasury yield reached a peak of 4.51% before dropping to the 4.46% range, while the 2-year Treasury yield rose to 5.15% and fell to 5.11%. Similarly, the 30-year yield rose to a high of 4.59% and then fell to the 4.55% range.
“The storm in the US bond market has evolved into a hurricane, causing major damage to risky assets such as stocks,” commented Marios Hadjikiriakos, a senior investment analyst. If this trend continues, there may be upward pressure on products, he added.
This article was published on the Infomax financial information terminal at 22:03, 2 hours earlier.
(New York = Yonhap Infomax) Reporter Sunyoung Jeong = US Treasury bond prices showed a mixed trend.
Yonhap News Agency Infomax US Treasury 10-year yield tick chart
As the tightening policy of the US Federal Reserve (Fed) is expected to be prolonged, US Treasury yields, which had reached their highest level for several years, showed a somewhat easing trend ahead of the weekend.
According to Yonhap Infomax (screen no. 6532), as of 8:45 a.m. on the 22nd (hereafter US eastern time), the 10-year Treasury bond yield in the New York bond market was trading at 4.474%, down 0.30bp from 3 o’clock on the previous trading day.
The 2-year yield, which is sensitive to monetary policy, was 5.118%, down 3.00bp from 3 o’clock the previous day.
The yield on 30-year government bonds was 4.560%, up 0.30bp from 3 o’clock the previous day.
The gap between 10-year and 2-year bonds narrowed from -67.1bp on the previous trading day to -64.4bp.
Government bond yields and prices are moving in opposite directions.
As the US economy is doing well and inflation is not expected to fall easily to the 2% level, the tightening cycle of the US Federal Reserve is expected to be long.
There are predictions that even if interest rates are not raised significantly, they will be kept high and the interest rate cut, which was expected to start in the middle of next year, will be pushed back.
However, expectations for an interest rate hike in November this year are still not gaining much traction.
According to CME Group’s FedWatch tool, federal funds rate futures reflect a 72.6% chance that the Fed will keep rates unchanged in November. The probability of a 25bp increase in the interest rate is around 27.4%.
Expectations for an interest rate hike in December have not increased.
In December, the probability of an interest rate freeze was 57.7%, and a 25bp increase was 36.7%.
The market confirmed in the dot plot that 12 members of the Federal Reserve expect an additional increase in the interest rate this year, but further confirmation is needed.
Major indicators such as the September employment indicator and the consumer price index (CPI) remain, and there have not been many specific comments from Federal Reserve officials yet.
Federal Reserve Board Director Lisa Cook is scheduled to give a speech this afternoon.
While expectations are high for prolonged tightening by the Federal Reserve, the recent increase in oil prices and concerns about the federal government shutdown (temporary suspension of federal government operations) on October 1 are other variables.
US Treasury yields have fallen somewhat after reaching their highest point in several years.
The 10-year Treasury yield peaked at 4.51% and then fell to the 4.46% range, while the 2-year Treasury yield rose to 5.15% and fell to 5.11%.
The 30-year yield rose to a high of 4.59% and then fell into the 4.55% range.
US Treasury yields, which had been soaring on concerns that the tightening cycle would be long, fell after reaching a new high.
“The storm in the US bond market has evolved into a hurricane, causing major damage to risky assets such as stocks,” said Marios Hadjikiriakos, senior investment analyst at “If the trend is maintained, there may be upward pressure on product continues,” he said. .
syjung@yna.co.kr
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This article was published on the Infomax financial information terminal at 22:03, 2 hours earlier.
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