(New York = Yonhap Infomax) Correspondent Jeong Seon-yeong = US Treasury bonds showed a mixed trend.
After U.S. Federal Reserve Chairman Jerome Powell mentioned in his semiannual monetary policy report to the Senate that the pace of interest rate hikes might be accelerated, he is regarding to testify to the House of Representatives.
Market participants are awaiting further comments from Chairman Powell.
According to Yonhap Infomax (screen number 6532), as of 8:49 a.m. on the 8th (herefollowing Eastern Time), the 10-year government bond yield in the New York bond market was trading at 3.949%, down 2.50bp from 3:00 on the previous trading day.
The two-year yield, which is sensitive to monetary policy, was 5.023%, up 1.30bp from 3:00 the previous day.
The yield on 30-year government bonds was 3.852%, down 3.80bp from the 3 o’clock on the battlefield.
The gap between the 10-year and 2-year bonds widened to -107.4bp from -103.6bp on the previous trading day.
Treasury yields and prices move in opposite directions.
The bond market is waiting for additional hints ahead of House Speaker Jerome Powell’s testimony on the same day.
“We are prepared to increase the pace of interest rate hikes if overall economic indicators call for more rapid tightening,” Powell said.
“Inflation has been easing in recent months, but the process of getting it back to 2% has a long way to go and is likely to be bumpy,” Powell said.
“As mentioned earlier, the latest economic indicators are stronger than expected, so the final interest rate may be higher than expected,” he said.
Chairman Powell’s hawkish remarks put weight on the possibility of a return to the Fed’s 50bp rate hike.
The two-year Treasury yield rose to 5% for the first time since 2007, then raised it further.
On the other hand, yields on 10-year and 30-year Treasury bonds show somewhat mixed patterns.
The inverted width of the 2-year and 10-year US Treasury yields, which are considered a signal of economic recession in the bond market, exceeded -100bp, widening the most in 40 years since 1981.
The Fed funds rate futures market reflected a 74.9% chance of a 50 basis point rate hike by the US Fed in March. The possibility of a 25bp hike was reflected at 25.1%.
The MOVE index of Bank of America (BofA), which indicates bond market volatility, soared to 133 units. This is the highest level this year.
TS Lombard strategist Steven Blitz said, “With Chairman Powell’s testimony, a 50 basis point hike next week is on the table,” adding, “This is a tacit admission that the delay in raising rates was a mistake.”
“It’s harder to understand where the final interest rate level will be than a few months ago, as we don’t know where disinflation will stabilize without a recession,” he said.
syjung@yna.co.kr
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This article was served at 23:17, 2 hours earlier on the Infomax financial information terminal.
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