The yield on the bonds us treasury Two-year bonds rose the day before, hitting a nearly two-month high as investors expect higher interest rates for longer to contain inflation, following the hawkish message from the head of the Federal Reserve.
The head of the Fed, Jerome Powellsaid Friday at the symposium on jackson hole that the entity could have to raise rates more to cool down inflation that is still too high.
However, he promised to exercise caution in the coming meetings, taking into account both the progress made in easing price pressures and the risks stemming from the surprising strength of the US economy.
The yield on the two-year note, which reflects rate expectations, rose as high as 5.106%, and later gained 2.4 basis points to 5.08%.
The yield curve between the two-year and 10-year paper continued to invert, at -88.20 basis points, matching the spread reached on August 10. The added investment reflected expectations for more rate hikes.
“Much of this is due to the revaluation of rate increases. After Powellthe market prices higher odds for more hikes in 2023 and also expects some cuts in 2024″, said Gennadiy Goldberg of TD Securities in New York.
The Treasury bid will also be a big factor this week, when $127 billion worth of debt will be auctioned: $45 billion in two-year notes and $46 billion in five years on Monday and $36 billion in seven. years on Tuesday.
The yield on benchmark 10-year bonds fell 2.1 basis points to 4.218%, and that on 30-year notes fell 2.1 basis points to 4.274%.
Source: Gestion
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