10-Year US Treasury Yield Nears 15-Year High
The United States 10-year Treasury yield, the benchmark for borrowing costs worldwide, moved towards 4.2%, approaching a 15-year peak of 4.3% hit in late October, as worries about inflation and lingering fears that the Federal Reserve would need to stay aggressive spooked bond investors.
Recall that the Federal Reserve delivered a widely expected 75 basis points hike last week while flagging a longer monetary tightening path as the central bank seeks to bring down inflation to its 2% target.
While recent data showed that the job market remains extremely tight, now, all eyes turn to October inflation data, due on Thursday, or more clues on future interest rate hikes. Meantime, Germany’s 10-year Bund yield, the European benchmark, rose to as high as 2.3%, closing in on its highest level since August 2011.
The dollar index strengthened to around 111 on Monday, recouping some losses from the previous session as it benefited from haven demand after China quashed hopes that it was planning to gradually ease Covid-19 restrictions.
Meanwhile, investors continued to assess the outlook for US interest rates, with a mixed US jobs report last week reinforcing expectations that the Federal Reserve will slow the pace of rate increases in December.
Markets are currently betting that the Fed will hike rates by 50 basis points next month after delivering four successive 75 basis point rate increases. READ: Nigeria Sells 15-Year Bond for 16%
However, a hotter-than-expected US inflation report on Thursday would likely fuel bets for another 75 basis point rate hike and drive a fresh dollar rally.
Meanwhile, investors across the globe digested unexpected declines in China’s imports and exports for September, while awaiting the results of the US midterm elections on Tuesday, as well as a key US inflation report later in the week that could influence the size of an expected Federal Reserve rate hike in December. #10-Year US Treasury Yield Nears 15-Year High