Global government bonds got off to a cautious start to the year as traders scaled back bets on major central banks cutting interest rates significantly this year.
Germany 10-Year Treasury Bond YieldOn Tuesday (2nd), it jumped 9 basis points to 2.11%, a new high in more than two weeks, while the UK 10-Year Treasury Bond YieldUp 13 basis points. U.S. Treasury yields rose at least 6 basis points, putting the Bloomberg Dollar Spot Index on track for its biggest one-day gain in nearly three months.
The moves reflect doubts that policymakers will deliver on the level of monetary easing priced in by money markets. Although central banks have indicated that they may raise interest rates for the last time in this cycle, they are unwilling to give up their efforts to combat inflation prematurely.
Emmanouil Karimalis, interest rate strategist at UBS Group AG, said in an interview: “There may be more bearish tone in the market. The European Central Bank (ECB) and other central banks have not yet given the signal to lift the alarm.”
Traders are betting that the European Central Bank (ECB) will cut interest rates by 158 basis points this year, about 10 basis points less than last week.
AlthoughEURInflation in the region has been falling, but central bank officials believe inflation data may rise in the coming months, and traders will pay close attention to the data released on Friday (5th)EURDistrict consumer price index (CPI) data. In addition, conflicts in the Middle East have also raised concerns about oil prices, which have been rising on Tuesday.
In the United States, money markets priced in the Federal Reserve’s (Fed) easing policy this year briefly fell below 150 basis points for the first time since December 21 last year. While U.S. corporate hiring is slowing, a resilient labor market supports the view that the economy will continue to expand this year, albeit at a slower pace.
The prospect of a flood of new debt issuance could also weigh on U.S. debt, especially after a strong performance toward the end of the year. The U.S. 10-year Treasury note has risen sharply since the end of October, when the yield briefly exceeded 5%.
Iain Stealey, international chief investment officer for fixed income at JPMorgan Asset Management, said: “Perhaps bond yields have fallen a little too low in the short term. However, if the central bank completes raising interest rates, from a long-term strategic perspective Look, the yields look attractive.”
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2024-01-02 13:01:20
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