TREASURIES — Two — year yield hits highest since 2024 as investors weigh outlook for rate hikes
Bank of Japan raises rates Investors weigh outlook for more Fed rate hikes US oil prices settle lower (Updates to afternoon) By Caroline Valetkevitch NEW YORK, Sept 18 (Reuters) — US Treasury yields were higher on Friday, with two-year yields hitting their highest since July 2024, as investors evaluated the outlook for interest rates following the Federal Reserve's first rate hike in three years this week. Investors are eyeing the prospect of a new global rate-tightening cycle as worries about inflation have mounted. On Friday, the Bank of Japan raised interest rates to a 31-year high and its governor signaled the central bank has entered a new phase focused on preventing inflation from overshooting its target. The Fed on Wednesday raised rates and flagged more hikes in the coming months, while Fed Chairman Kevin Warsh delivered hawkish comments. "The two-year is going to be moving in tandem with hike pricing," said Molly Brooks, US rates strategist at TD Securities. "There's more risk (of) pricing in more hikes than pricing out hikes at this point." Traders see a more than 55% chance of another increase when the US central bank next meets in October, according to CME FedWatch. Tha
Bank of Japan raises rates Investors weigh outlook for more Fed rate hikes US oil prices settle lower (Updates to afternoon) By Caroline Valetkevitch NEW YORK, Sept 18 (Reuters) — US Treasury yields were higher on Friday, with two-year yields hitting their highest since July 2024, as investors evaluated the outlook for interest rates following the Federal Reserve's first rate hike in three years this week. Investors are eyeing the prospect of a new global rate-tightening cycle as worries about inflation have mounted.
On Friday, the Bank of Japan raised interest rates to a 31-year high and its governor signaled the central bank has entered a new phase focused on preventing inflation from overshooting its target. The Fed on Wednesday raised rates and flagged more hikes in the coming months, while Fed Chairman Kevin Warsh delivered hawkish comments. "The two-year is going to be moving in tandem with hike pricing," said Molly Brooks, US rates strategist at TD Securities. " Traders see a more than 55% chance of another increase when the US central bank next meets in October, according to CME FedWatch.
That expectation was at 53% late Thursday. 8 bps, the flattest since June 25. The two-year yield has been driven higher faster than the 10-year yield, in part because of expectations of more hikes, while longer-dated debt has been relatively kept in check by the Fed's apparent willingness to control inflation. "The Fed meeting was able to kind of calm market nerves a little bit in terms of the long end," Brooks said.
Investors will weigh upcoming data for clues about the US economic outlook. Yields mostly held gains after data on Friday, including a report showing US factory production unexpectedly fell in August after seven straight monthly increases. Spikes in oil prices tied to the US-Israeli war on Iran have been behind some of the inflation concern. But oil prices eased on Friday after China, acting on a request from Saudi Arabia, quietly asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure.
S. 3 basis points at 5%. 041% on Tuesday, the highest since 2007. 743%.
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