Treasury bond yields rose on Thursday, erasing their losses from a previous session that were caused by Fed Chairman Jerome Powell, who signaled that the central bank would not accept more aggressive increases at future meetings.
Yield per benchmark A 10-year Treasury note grew by more than 17 basis points to 3.09% at about 11:15 Eastern European time, reaching its highest level since at least 2018. Yield on 30-year treasury bonds increased by 17 basis points to 3.176%. Yields are moving back in price, and 1 basis point is 0.01%.
The Fed has announced that raising the base interest rate by half a percentage point on Wednesday afternoon, which became the largest hike since 2000, but met market expectations.
The US Federal Reserve also outlined its plans to start cutting the balance sheet in June.
However, Fed Chairman Jerome Powell said the 75-point increase was not something that the Federal Open Market Committee “actively considered”. This led to a drop in 10-year yields on Wednesday afternoon.
Freddie Late, founder and CEO of Latitude Investment Management, said on CNBC’s “Squawk Box Europe” on Thursday that the market relief rally was understandable given fears that a 75-point rate increase could be in the cards, especially given recent comments. from Fed President St. Louis James Bullard.
However, Light said the Fed is still going to continue its hawkish way of raising rates to bring them back to about 3% over the next six to seven months.
Light said that’s why he believes that “the trend is still in play, and most likely we see a continuation of the steps we’ve seen since the beginning of the year.”
Yields on the 10-year Treasury reached 3% on Monday and again on Wednesday morning ahead of a meeting amid fears that rising inflation and a more aggressive rise in Fed interest rates could slow economic growth.
“We believe the Fed’s hawkish position is largely taken into account in the stock and bond markets,” said Jay Hatfield of Infrastructure Capital Management. “We expect the 10-year treasury to start reaching 3% in the region as global pension investors redistribute $ 52 trillion in assets to near risk-free treasuries … The chairman’s press conference was very positive as Chairman Powell ruled out a 75 bp increase. . and it is shown that only two meetings are expected to increase by 50 bp and then they will be re-evaluated. “
Since then, the 10-year benchmark has eased, but remains high, and investors are watching key economic data.
On Thursday, weekly unemployment claims were slightly higher than expected. A productivity readings for the first quarter showed the fastest decline since 1947.
As for Russian-Ukrainian war, Pentagon spokesman John Kirby said the Russians had made uneven progress in the Donbass region after weeks of efforts to replenish supplies and reposition. However, the United States and its allies are in a hurry to send additional security assistance amid an intensified Russian attack in eastern and southern Ukraine.
Auctions for $ 35 billion for 4 weeks and $ 30 billion for 8 weeks are scheduled for Thursday.
– Holly Elliott of CNBC contributed to this market report.
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