10-Year US Treasury Yield Prints at 4.1%, Dollar Slides
The US 10-year Treasury yield, the benchmark for borrowing costs worldwide, bottomed around 4.1%, not far from a 15-year peak of 4.3% reached in late October, as investors awaited the outcome of congressional midterm elections and inflation data due to be released later in the week.
If Republicans win the House of Representatives and possibly the Senate, this could result in political gridlock that hampers significant reforms while boosting risk appetite.
On the monetary side, the Federal Reserve delivered a widely expected 75 bps 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, for more clues on future interest rate hikes.
In a light day of economic data, investors’ focus turned to the US midterm elections, which will determine a shift of power in Washington, with a slip government seen as the best outcome for markets.
Investors also await US inflation data due on Thursday that could signal how much further the Federal Reserve may tighten financial conditions as it seeks to cool an overheating economy.
With attention on the U.S. midterm election and Thursday’s key inflation numbers, trading more broadly in currency markets was generally subdued. READ: Bonds Yield Prints at 14.6%, Naira Steadies
The dollar was down around a fifth of a per cent at 145.45 yen, while the euro was just a touch softer at $1.0064. Markets expect Thursday’s inflation data to show a decline in yearly core numbers to 6.5% in October from 6.6% a month earlier.
U.S. money markets price in a 50 basis point Fed interest rate hike in December and a roughly 33% chance of a bigger 75-bps increase. #10-Year US Treasury Yield Prints at 4.1%, Dollar Slides