Bond Yields Soar, Spiking Fed Rate Hike Bets
"Bloomberg Real Yield" highlights the market-moving news you need to know. Today's guests: Parametric SMA Fixed Income Portfolio Manager Nisha Patel, Citi Head of Global Rates Deirdre Dun, Goldman Sachs Head of Multi Sector FI Investing Lindsay Sachs, Oaktree Capital Management Deputy CIO Strategic Credit Platform Milwood Hobbs. (Source: Bloomberg)
US Treasury yields experienced a rise on Thursday (Sep 24), with the 30-year bond yield reaching its highest level since 2004. This surge in yields was driven by traders' perception of a 70% chance of another rate increase by the Federal Reserve when they meet in October. Fed policymakers, including Anna Paulson from the Philadelphia Fed and John Williams from the New York Fed, stated that additional interest rate hikes may be necessary to combat high inflation.
Following the Federal Reserve's rate hike last week, yields spiked on Wednesday after a stronger-than-expected US purchasing managers' report rekindled inflation fears, prompting traders to increase their bets on Fed rate hikes. The 30-year yield climbed 7 basis points to 5.472%, marking its highest level since June 2004. The 10-year Treasury note yield also rose 7.1 basis points to 5.185%, touching a 19-year high.
Despite a soft performance in the 7-year note auction, the 2-year US Treasury yield increased by 1.9 basis points to 4.914%, while the yield curve gap between 2- and 10-year Treasury notes stood at a positive 26.9 basis points.
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