Home Markets Treasury yields in focus after hot inflation

Treasury yields in focus after hot inflation

by SuperiorInvest

U.S. Treasury yields continued to rise on Wednesday as investors digested the market’s dramatic rout from the previous session, fueled by hot inflation.

Yield on 2-year treasurythe part of the curve most sensitive to Fed policy, traded 1 basis point higher at 3.773% at around 5:00 a.m. ET, at one point reaching as high as 3.805%, the highest level since November 2007. Tuesday’s session saw it rise 17 points.

Yields move inversely to prices and the basis point is equal to 0.01%.

Meanwhile, the yield on the benchmark 10-year Treasury rose just over one basis point to trade at 3.439%. Yield on The 30-year government bond was rose just over half a basis point to 3.517%.

Stock futures rose slightly on Wednesday morning after higher-than-expected inflation on Tuesday sent the major averages to their worst day since June 2020 and revived investor fears of more rate hikes by the Federal Reserve.

August Consumer Price Index Report inflation rose by 0.1% month-on-month. Markets had expected a lower figure due to a drop in gas prices, which were down 10.6% from the previous month. Markets are pricing in another 75 basis point rate hike from the Fed, but there is some expectation that the next rate hike could be even higher.

Some traders now expect a full basis point rate hike from the US Federal Reserve at its September meeting, according to the CME FedWatch tracker Fed funds futures bet. Economists in Nomura is now also expecting see the full percentage increase.

The inflation data “caught the market by surprise,” LPL Financial’s Quincy Krosby told CNBC. “The market expected at least that we’ve leveled off — maybe we’re not moving down, but we’re certainly not moving up. It was the wrong direction, and of course the concerns always translate into what that means for the Fed.”

President Joe Biden, who was asked during a press conference Tuesday if he was worried about the inflation numbers, said: “No, I’m not, because we’re talking about one-tenth of 1 percent.”

“The stock market doesn’t necessarily reflect the state of the economy, as you well know,” Biden also said. “And the economy is still strong. Unemployment is low. Jobs are growing. Manufacturing is good … I think we’ll be fine.”

The mortgage market index and mortgage application data are available on Wednesday, along with data on oil and gasoline inventories and the core monthly and annual producer price index for August.

— CNBC’s Abigail Ng contributed to this report.

Source Link

Related Posts

%d bloggers like this: