Saturday, March 25, 2023

Treasury yields collapse to 2008 levels | Nation World News

The return of short-term US treasury bonds this Monday, March 13, lined up to the levels of the 2008 crisis, while the collapse of the famous financial institution Silicon Valley Bank led investors to strongly expect a big rise in the interest rate of the Federal a. Reserve and seek security of public debt.
For its part, the yield on the note fell below 4% for the first time since last October and then lost 48 basis points (bp), to 4.1%.

Two-year yields, which drive rate expectations, were on track for their biggest daily decline since September 2008, during the global financial crisis.

They also posted their biggest three-day decline of 97bp since the “Black Monday” stock crash of 1987. It yields inversely when prices move.

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And as for the two-year/10-year yield curve, it also narrowed sharply on Monday, with the bullion lowering its benchmark to -57.40bp as investors lowered rate-hike expectations. It is the narrowest gap since the beginning of January. It was then located at -63.20 bps.

“The market is thinking about not only SVB (Silicon Valley Bank), but many banks. The sharp increase in policy rates and high yields for a year and a half has put many banks under stress,” said Stan Shipley, fixed income manager at Evercore ISI in Venice.

In this context, there was an expectation that the behavior of H in relation to hikes could lead to the continued spread of risk to the systematic, which affects other banks in the US.

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“The bottom line is that the outlook for rates was not as high as thought. Last Wednesday there were people thinking that 6% (of the federal funds rate) was a sure thing. I don’t think anyone thinks that now. “Shipley added.

In this vein, Goldman Sachs predicted that the Fed would not raise rates at next week’s meeting, helping to fuel a large rally in short-term government debt on Monday. Meanwhile, the 10-year Treasury yield fell 17 bp to 3,520%, rolling back to 3,418%, the lowest since February 3.

Nation World News Desk
Nation World News Desk
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