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Saturday, February 4, 2023

US 10-year Treasury yield records its biggest annual increase in decades

leek chuck mikolajczak

Nuevanew yorkDec 30 – The yield on the 10-year US Treasury bond rose on Friday, ending the year with its biggest annual increase in decades, as the Federal Reserve embarked on a tighter monetary policy path to combat inflation. Did.

The 10-year return has risen nearly 238 basis points this year, the biggest annual increase since at least 1953, according to Refinitiv data, as the US central bank set its fastest pace since the 1970s. Interest rates have increased since. High inflation after years of loose monetary policy.

“Labor shortages continue to put pressure on inflation, which will force central banks to raise rates,” said Thomas Martin, portfolio manager at Global Investments.

* “So we’re trying to move toward something more normal, but it’s going to take some time.”

* The 10-year yield rose 4.4 basis points to 3.879% on Friday.

* After hitting a nearly three-month low on December 7, as expectations grew that the Federal Reserve would announce the end of its rate hike cycle, the 10-year yield continued to rise on the back of monetary policy announcements from the US. Central banks, the Bank of England and the European Central Bank this month, rose to a six-week high of 3.905% on Friday.

* The US central bank forecasts the Fed’s benchmark rate will rise above 5% next year, while Chairman Jerome Powell and other Federal Reserve officials have said borrowing costs need to be kept high to combat inflation. may be required.

* The yield on the 30-year Treasury note rose 5.2 basis points to 3.975%.

* However, analysts caution that given the sparse holiday trading, it is difficult to overemphasize market direction this week.

* The portion of the yield curve that measures the difference between the two-year and 10-year loan rates, which is considered an indicator of economic expectations, was at -55.3 basis points. Many consider the reversal as a bearish signal.

* Meanwhile, the two-year yield, which moves in step with interest rate expectations, rose 6.1 basis points to 4.428%. The two-year yield has risen nearly 370 basis points this year, the largest annual increase since its regular issuance in 1972.

World Nation News Desk
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