The pressure in fixed income will not stop. The focus is on the ten-year US Treasury bond, which just surpassed the 5% level for the first time since 2007. In particular, the ten year papers went up in the middle of the session up to 5.019%, as opposed to 4.916% where it closed on Friday. Thus they reach the pre-bankruptcy level of Lehman Brothers, but there is triple the debt than fifteen years ago. Specifically, US economic debt increased from ten trillion to 33 trillion during this period, while interest payments associated with emissions are heading towards a trillion dollars annually after doubling in one and a half years.
The expectation that the US Federal Reserve (Fed) keeping interest rates higher than expected pushing up sovereign debt yields. Last week, the Fed Chairman Jerome Powellsuggested this message in the middle of a vague speech before the December 1 meeting.
In this sense, he insisted that the central bank of the US remains attentive to economic data to adjust its rate increase, although he stressed that inflation remains high and WHAT still have some way to go to bring it to 2%. This requires achieving a “tight” position and maintaining it at least until you show signs of approaching the target. Although the labor market has cooled in recent months, it is very close to the historically low 3.4% reached this year, after closing in September at 3.7%.
In this context, the Fed has interest rates continue to rise from March 2022, with exceptions in June and September of this year. Currently, the money reference rate is between 5.25% and 5.5%, the highest since 2001. The next meeting is which the Fed has scheduled is November 1. As with US bonds, in Europe, rates rose again after Friday’s moderation. The yield on the ten-year German bond, considered the safest in the Old Continent, reached 2.966%, while the ten-year Spanish paper once again exceeded 4%.
