(New York = Yonhap Infomax) Correspondent Jeong Seon-young = US Treasury prices fell.
Although Federal Reserve Chairman Jerome Powell said that he did not expect a rate cut this year, market participants paid attention to the possibility that the aftermath of the banking sector turmoil will continue.
As the central banks of the UK and Switzerland also raised interest rates one after another, bond purchases did not gain much momentum due to the central banks’ willingness to raise interest rates, which have yet to see sufficient tightening effects in response to inflation.
According to Yonhap Infomax (screen number 6532), as of 8:44 a.m. on the 23rd (hereafter Eastern Time), the 10-year government bond yield in the New York bond market was trading at 3.514%, up 1.80bp from 3:00 on the previous trading day.
The two-year yield, which is sensitive to monetary policy, was 4.005%, up 2.50bp from 3:00 the previous day.
The yield on the 30-year government bond was 3.728%, up 2.60bp from the 3 o’clock battle.
The gap between the 10-year and 2-year bonds slightly widened from -48.4bp on the previous trading day to -49.1bp.
Treasury yields and prices move in opposite directions.
Market participants are conscious of Chairman Powell’s comments that the Fed will not cut rates this year, even as it expects the Fed to end its cycle of rate hikes sooner or later.
Chairman Powell stressed that banking troubles could tighten credit conditions after the Federal Open Market Committee (FOMC) raised interest rates by 25 basis points the previous day.
If this is the case, it is believed that rather than continuing to raise interest rates, it will have to decide whether to raise interest rates in the future while looking at credit tightening.
However, it is expected that there will be no interest rate cut this year despite the banking risk.
Market participants noted that the Fed showed little willingness to cut rates despite uncertainty about the impact of banking issues.
The Bank of England (BOE) and the Swiss National Bank (SNB) also started raising interest rates on the same day.
In a statement issued after the Monetary Policy Committee (MPC), the BOE announced that it would raise the benchmark interest rate from 4.0% to 4.25% per annum.
This is in line with market expectations. UK interest rates hit their highest since October 2008.
The Swiss Central Bank also raised its benchmark interest rate by 50 basis points on the same day.
This is the same move as the European Central Bank (ECB) previously raised its key interest rate by 50 basis points.
US Treasury yields were supportive.
In particular, the 30-year US Treasury yield peaked at 3.73% during the day.
The 10-year yield showed a limited rise after rising to the 3.50% level.
The yield on the 2-year Treasury remains at 3.92%.
“The most important message from the Fed meeting is that the evolution of disruptions in the banking sector and its impact will be a key factor in determining how much further tightening is needed,” said Matthew Rousetti and other members of the Deutsche Bank US economics team. “We made it clear that we anticipate the possibility of straining this economy and replacing some further rate hikes,” he said.
“Conversely, if expected tightening of credit conditions does not materialize or if inflation continues to rise surprisingly, the Fed may have to raise interest rates even higher.”
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This article was served at 22:34, 2 hours earlier on the Infomax financial information terminal.
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