Sunday, May 28, 2023

US Treasury bond yields fall on speculation the Fed will curb rate hikes

Pour Herbert Lasho

nuevaNew YorkOctober 26 – US Treasury bond yields fell on Wednesday, helped by a weaker dollar and renewed speculation that the Federal Reserve may slow the pace of raising interest rates to tackle higher inflation.

* The spread between returns on three-month bills and 10-year bonds turned negative during the day on Tuesday, but the reversal hasn’t closed since March and February 2020, when it signaled a recession was on the way.

* The Fed’s dual mandate of ensuring price stability and maximum employment has fueled market speculation that the US central bank will ease its aggressive rate-hike policy to prevent the economy from sliding into a deep recession.

* Issuing consumer price indices in November and December will determine in the short term how the Fed approaches its interest rate strategy, said Jim Vogel, a strategist MFA Financial Ann Memphis, Tennessee.

* “The Fed will have to look at the potential for lower inflation in the next two releases Indian Penal Code And without that they will raise rates by 75 basis points in December,” Vogel said.

* Some market players also believe that the Bank of Canada’s lower-than-expected rate hike on Wednesday signaled a softer tone from major central banks, but Vogel disagreed. “It’s important today, but it won’t be important next week,” he said.

* Yields on 10-year notes slipped below 4% for the first time in more than a week and were down 9.3 basis points to 4.017% in afternoon trade in New York. Returns on the 30-year note fell 10 basis points to 4.164%.

* The difference between two-year and 10-year bond yields, another bearish indicator when returns are reversed, was trading at -41.2 basis points.

* The two-year debt yield, which generally aligns with rate expectations, fell 4 basis points to 4.427%.

Nation World News Desk
Nation World News Desk
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