2023-10-10 00:10:00
Due to the tense situation in the Middle East, the yield on US 10-year government bonds temporarily fell by 18 basis points (bp, 1 bp = 0.01%) to 4.62% in morning trading on the 10th Asian time. U.S. Treasury prices rose by the most since March of this year.
As the fighting intensifies, with the Islamic group Hamas, which effectively controls the Palestinian autonomous region of Gaza, carrying out large-scale attacks on Israel, and the country’s military also carrying out heavy airstrikes on Gaza, the flight of funds to safer assets has accelerated. On the other hand, dovish comments from US Federal Reserve officials also pushed up government bond prices.
The yield on two-year government bonds also fell by 16 basis points to 4.93%. Investors increasingly believe that the Federal Reserve will keep its federal funds (FF) interest rate target unchanged until the end of this year.
Althea Spinozzi, senior fixed income strategist at Saxo Bank, said: “The Federal Reserve is facing a complex situation that might lead to it keeping interest rates on hold at the next Federal Open Market Committee (FOMC) meeting. “The evolving situation in the Middle East, coupled with the recent sell-off in bond prices, has pushed long-term yields to multi-decade highs, and policymakers will be hesitant to raise rates.”
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Original title:Treasuries Jump on Dovish Fed Comments, Middle East Conflict(excerpt)
(Updates with strategist’s thoughts)
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