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Saturday, December 03, 2022

US bond yields rise on expectations, Fed will stay on course

US Treasury yield rises as speculation on Fed easing

Pour Herbert Lasho

nuevaNew YorkOctober 31 – Treasury yields rose on Monday as the relatively strong US economy and labor market suggested the Federal Reserve remained on course, aggressively raising interest rates to control inflation.

* The two-year note yield, which generally aligns with rate expectations, rose 8.1 basis points to 4.503%, while the 10-year loan yield rose 7.1 basis points to 4.081.%.

* The Fed needs to curb inflation by curbing demand, and to do so it needs employment, said Anthony Saglimbin, chief market strategist at Ameriprise Financial in Troy, Michigan.

* In the past 10 days both the bond and equity markets had weighed in on the idea that the Fed might halt its rate hikes on hopes that inflation was peaking.

* Fed rate futures forecast a 98.9% chance that the Fed will increase rates by 75 basis points by the end of its two-day policy meeting on Wednesday. The market has also raised its outlook for the Fed’s target rate to hit a high of 4.97% in May 2023.

* A closely watched portion of the bond yield curve, which measures the difference between returns on two-year and 10-year notes, seen as a harbinger of recession, when the curve inverts, 42.4 points was on basics.

* Yield on the 30-year paper increased by 8 basis points to 4.209%.

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