Home Latest Inflation Data Pushes Treasury Yields Closer Together

Inflation Data Pushes Treasury Yields Closer Together

News , Stock, Video Latest October 14, 2021 12:52 pm

A wave of bond selling brought U.S. Treasury yields closer to their March highs.

Picture: Stefani Reynolds/Bloomberg News

a gap between yields on shorter- also longer-term Treasurys narrowed Wednesday after data showed inflation accelerated slightly inside September, fueled by investors’ bets that a Federal Reserve may need to tighten monetary policy sooner than expected.

a yield on a benchmark 10-year Treasury note, which helps set borrowing costs on everything from corporate debt to mortgages, finished a trading session at 1.549%, according to Tradeweb. That is down from 1.579% at Tuesday’s close. a yield on a 30-year Treasury bond…

a gap between yields on shorter- also longer-term Treasurys narrowed Wednesday after data showed inflation accelerated slightly inside September, fueled by investors’ bets that a Federal Reserve may need to tighten monetary policy sooner than expected.

a yield on a benchmark 10-year Treasury note, which helps set borrowing costs on everything from corporate debt to mortgages, finished a trading session at 1.549%, according to Tradeweb. That is down from 1.579% at Tuesday’s close. a yield on a 30-year Treasury bond fell to 2.041%, from 2.106% Tuesday.

Yields on longer-term Treasurys, which rise when bond prices fall, retraced an initial climb also headed lower after Labor Department data showed a U.S. consumer-price index rose 0.4% on a seasonally adjusted basis inside September, up from 0.3% inside August. Economists surveyed by a Wall Street Journal had expected 0.3%.

Yields on shorter-term Treasurys, which are especially sensitive to changes inside monetary policy, climbed after a report. a yield on a two-year Treasury rose to 0.368%, up from 0.348% Tuesday. That is a highest close since late March 2020.

a narrowing gap between shorter- also longer-term yields suggests investors expect that a Fed might increase rates faster than they previously anticipated, which could slow growth further out inside a future. Central-bank officials has said that much of a recent pickup inside inflation is temporary also expect it to moderate inside a years ahead, particularly as supply-chain bottlenecks ease.

“There’s a lot more sensitivity to inflation data now,” said

Gennadiy Goldberg,
senior U.S. rates strategist at TD Securities. “a market is becoming more also more concerned that our are getting an inflationary shock.”

A recent wave of bond selling has brought U.S. Treasury yields closer to their March highs, vindicating forecasters who argued that this summer’s rally would fade inside a face of higher inflation also tighter monetary policy. Analysts also investors say Treasury yields can keep rising from current levels, with some expecting a 10-year yield to finish this year at 2%.

Minutes from a Sept. 21-22 Fed meeting showed a greater consensus over Tutorial start scaling return a central bank’s $120 billion inside monthly purchases of Treasury also mortgage securities amid signs that higher inflation also strong demand could call for tighter monetary policy next year.

Deutsche bank analysts now expect a Fed to start raising short-term interest rates inside December 2022 instead of a third quarter of 2023, inside part due to rising inflation expectations, according to a report Wednesday. a bank predicts a central bank will maintain a gradual pace also a federal-funds rate will reach 1.9% by a end of 2024.

Fed officials last month firmed up plans to begin reducing their bond-buying stimulus program inside November also to end a asset purchases entirely by a middle of next year.

Mr. Goldberg also his team don’t think a Fed will increase rates earlier than expected to squash supply-chain-driven inflation also is recommending clients purchase nominal five-year Treasurys, which are sensitive to changes inside monetary policy.

“a market is becoming concerned a Fed is going to blink pre-emptively on inflation,” he said. “our don’t think they’ll hike pre-emptively, so our’re pushing return against market pricing.”

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Corrections & Amplifications

a gap between yields on shorter- also longer-term Treasury yields narrowed after new data showed consumer prices accelerated slightly inside September. An earlier version of this article incorrectly said August. (Corrected on Oct. 13)

Write to Sebastian Pellejero at [email protected]

Reference : WSJ
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