Treasury Yields Back on the Rise
The yield on the US 10-year Treasury note resumed its climb to 5.26% on Tuesday, holding at 2007 highs, and extending Monday’s 8bps rise, as traders continued to price in the prospect of further Fed tightening. Little progress has been made in US-Iran talks aimed at ending the conflict and fully reopening the Strait of Hormuz. A decline in oil prices on Tuesday did little to ease concerns that still-elevated energy costs could fuel inflation and prompt further Fed hikes. Meanwhile, strong US economic activity, along with concerns over large fiscal deficits and rising government debt, is also weighing on the bond market. Job openings and CB consumer confidence however, surprised on the downside. The PCE report tomorrow and the jobs report on Friday should provide further clarity on the strength of the US economy. Swaps traders are pricing in nearly a full percentage point of Fed rate hikes over the coming year. The benchmark 10-year yield is up nearly 46 basis points in September.
26% on Tuesday, holding at 2007 highs, and extending Monday’s 8bps rise, as traders continued to price in the prospect of further Fed tightening. Little progress has been made in US-Iran talks aimed at ending the conflict and fully reopening the Strait of Hormuz. A decline in oil prices on Tuesday did little to ease concerns that still-elevated energy costs could fuel inflation and prompt further Fed hikes. Meanwhile, strong US economic activity, along with concerns over large fiscal deficits and rising government debt, is also weighing on the bond market.
Job openings and CB consumer confidence however, surprised on the downside. The PCE report tomorrow and the jobs report on Friday should provide further clarity on the strength of the US economy. Swaps traders are pricing in nearly a full percentage point of Fed rate hikes over the coming year. The benchmark 10-year yield is up nearly 46 basis points in September.