Global bonds are on the verge of falling as U.S. Treasury yields soar to levels not seen since March. Strong U.S. economic data has fueled market speculation that the Fed will raise interest rates two more times this year.
US short-term bond yields, which are sensitive to trends in US policy interest rates, soared in trading on the 29th. Yields on two-year bonds rose 18 basis points to 4.89%, the highest since March. After hitting a yearly peak of 5.08% on March 8, it fell toward 3.50% after a series of bankruptcies in the industry led to a drop in regional bank stocks.
Fed Chairman Jerome Powell hints at at least two rate hikes this year
Source: Bloomberg
Interest rate swap rates are at levels that suggest a 0.25 percentage point hike in the Federal Funds (FF) rate target by September. There is also a roughly 50% chance of another 0.25 percentage point rate hike later this year. During the day, there was a scene where the weaving width was larger than that. At the beginning of April, the Fed was expected to cut rates by about 0.75 percentage points by the end of the year.
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“Today’s data showed interest rates to be higher for a longer period of time,” Tracy Cheng, portfolio manager at Brandywine Global Investment Management, said Wednesday. Expectations of a rate cut have “improperly priced in” the outlook for a change in U.S. monetary policy, he said.
Other markets have followed suit, with yields rising sharply in Europe. Asia-Pacific bonds also got off to a weak start on Monday, with Australian and New Zealand bonds also selling off.
news-rsf-original-reference paywall">Original title:Global Yields Surge as Traders Favor Two More Fed Rate Hikes(excerpt)
2023-06-30 01:26:16
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