2023-10-03 19:18:45
On Tuesday, the collapse in the US government bond market not only continued, but even accelerated, as a result of which their yields reached new multi-year highs. The reason for this was the publication of statistics on the US labor market, from which it follows that the number of open vacancies in the country jumped in August to 9.61 million from July 8.92 million, exceeding the consensus at 8.815 million.
Looking at these numbers, investors believed that the cycle of interest rate hikes by the Federal Reserve might continue. Currently, the swap market estimates the probability of a 0.25% federal funds rate hike in November at 40%, and at 60% by the end of the year.
“The speed of the decline in US Treasury prices has spooked all value investors,” said Michael Cloherty, chief rates strategist at UBS Securities. “If you can hold a long position in Treasuries for the next three months, then everything will be fine. But everyone is afraid of what might happen in the next three days.”
Fed officials have been using tough rhetoric lately, pointing to the possible need to continue raising interest rates and keeping them high for an extended period of time. This Friday, US labor market statistics for September will be published, which may adjust the corresponding market expectations.
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