10-Year US Treasury Yield Nears 14-Year High

10-Year US Treasury Yield Nears 14-Year High

The United States 10-year Treasury yield, the benchmark for borrowing costs worldwide, consolidated above 3.90%, not far from a 14-year peak of 4.02% touched on September 28th, as investors reassessed the outlook for monetary policy ahead of an eagerly anticipated US inflation reading.

A hotter-than-expected consumer price index (CPI) could heap pressure on the Federal Reserve to extend 75 bps rate hikes beyond this year. Conversely, a downside surprise could support the argument that inflation has already peaked.

Minutes of the latest Fed policy meeting signaled that policymakers were committed to pushing rates to a restrictive level until there are clear signs that inflation is easing.

Still, officials noted that at some point, slowing the pace of tightening would be appropriate while assessing the effects of cumulative policy adjustments. READ:10-Year U.S. Treasury Yield Rises to 1.62%

UK 10-Year Gilt Yield Hovers at 14-Year High

The yield on Britain’s 10-year Gilt remained near 4.5% on Thursday, close to 14-year highs, as the Bank of England programme of temporary gilt purchases is set to end on Friday.

On Thursday, the Financial Times reported that the central bank has signaled privately to bankers that it could extend its emergency bond-buying programme.

Early in the week, the central bank intervened in the bond market by increasing gilt purchases, aiming to support market functioning and contribute to an orderly end to its gilt purchase scheme on October 14th.

Meanwhile, yields for longer maturities jumped more than 20bps, with the 30-year one approaching 5.1% and the 20-year rising to 5.1%.

At the same time, a bigger-than-expected PPI reading for the US also pushed borrowing costs higher amid bets the Fed will continue to raise rates fast to tame high inflation.

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