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Wednesday, September 28, 2022

Benchmark yield rises to highest since 2011 and curve inverts further

Pour Karen Brettell

nuevaNew YorkSeptember 22 – US Treasury yields hit an 11-year high on Thursday and a key yield spread was the widest in at least two decades, as investors braced themselves for more Federal Reserve rate hikes to combat inflation. was deployed.

* The US central bank on Wednesday raised interest rates by 75 basis points and indicated further hikes.

* The target interest rate was raised to a range of 3.00%-3.25% and the cost of credit increased to 4.40% by the end of the year before new “dot plot” projections hit a maximum of 4.60% in 2023.

* Fed Chairman Jerome Powell said yields fell from Wednesday’s high as the so-called “dot plot” of rate expectations does not represent a plan or commitment because of the difficulty of predicting the trajectory of the economy.

* Benchmark 10-year Treasury yields rose from their four-month low on August 2 on hopes that the Fed will continue to tighten monetary policy and keep rates in check for longer, even if it intends to stunt growth. Take the risk

* Powell said central bank officials are “strongly determined” to bring inflation below the highest level in four decades and “will keep it until the job is done.”

* Traders also focused on Thursday on whether Japan was selling Treasuries to halt the yen’s slide. Japan is the largest foreign holder of the US Treasury with $1.23 trillion in assets as of July, according to government data.

* The two-year Treasury yield was trading at 4.105%, up from 4.132% earlier, the highest since October 2007. The benchmark 10-year US Treasury yield is 3.662%, the highest since February 2011.

* The yield curve between the 2-year and 10-year notes inverted by -58 basis points, the highest since at least 2000, indicating growing concern about an impending recession.

World Nation News Desk
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