Treasury yields fell Thursday morning as investors digested the latest Federal Reserve minutes, leaving 5-year and 30-year yields reversed.
Benchmark yield 10-year government bond At 4:15 am (Eastern Standard Time), we reduced 4 basis points to 2.5659%.Yield 30-year government bond I abandoned 2 basis points to 2.6046%, 5 year rate It fell 6 basis points to 2.6381%. Yields are inversely proportional to price, and one basis point corresponds to 0.01%.
The Fed’s minutes, released Wednesday afternoon, showed that US central bank officials plan to shrink their $ 95 billion balance sheet a month. The Federal Reserve has also shown that a rate hike of one or more 50 basis points could be ahead.
This hawkish tone from the Federal Reserve shows that the 10-year Treasury yield hit a three-year high. Investors are concerned that the Fed’s more aggressive tightening could actually undermine economic growth and lead to a recession in order to counter rising inflation.
The reversal of financial yields, with investors selling out short-term government bonds and supporting long-term debt, reflects these recessionary concerns.
Simon Harvey, head of FX analysis at Monex Europe, told CNBC’s Squawk Box Europe Thursday that the Fed’s withdrawal from the Treasury market is not always “too aggressive.”
He expected two consecutive 50 basis point interest rates to be announced at the next Fed meeting.
After these two rate hikes, the Fed said it would consider whether it was enough to fix inflation expectations and then whether it could continue to raise in increments of 25 basis points. ..
Harvey suggested that if this alone couldn’t curb inflation, it could lead to a “higher closing revaluation,” which is the end point for the Fed’s rate hikes.
On Thursday, the Ministry of Labor will announce the number of first unemployed claims filed at 8:30 am ET for the week ending April 2. Economists expect 200,000 new unemployment insurance claims to be filed last week.
The auction will be held with a $ 35 billion four-week invoice and a $ 30 billion eight-week invoice.