US 10-Year Bond Yield Jumps to 5.025%, Highest in 19 Years, Ahead of Fed Meeting

InfoQuest··USTH·Read original
4▲3 ▼0Impact / 5
Summary · why it matters

The yield on the 10-year US Treasury note, the benchmark bond yield, surged to its highest level in 19 years, or since 2007, today as investors heavily sold off US government bonds ahead of the meeting of the US central bank, the Fed, with widespread expectations that the Fed will raise interest rates at this meeting. At 12:10 pm Thailand time, the 10-year bond yield rose more than 0.06% to 5.025%, while the 30-year Treasury yield, which is more sensitive to geopolitical risk, climbed more than 0.05% to 5.384%, and the 2-year bond yield rose about 0.04% to 4.68%. The CME Group's FedWatch Tool indicates that investors assign more than 92% probability to the expectation that the Fed will raise interest rates by 0.25% at this meeting, after August inflation figures remained well above the Fed's 2% target. Jonathan Liang, chief investment officer for fixed income and currencies at Standard Chartered Bank, said the 10-year US Treasury yield is highly sensitive to inflation expectations, and as long as inflation remains above the Fed's 2% target, the strong correlation between inflation and bond yields is likely to persist for some time. Data from BMO Capital Markets indicates that over the past month, WTI crude oil prices and the 10-year US Treasury yield have moved strongly in the same direction, with a correlation as high as 0.96.

Impact on assets 5

Carbon Removal (DAC)▲
Financials▲
Others▲