Latest Search
Quote
| Back Zoom + Zoom - | ||||
|
Rising Rate Hike Expectations as US 30Y Treasury Auction Yield Tops 5% for First Time Since 2007
Recommend 3 Positive 0 Negative 2 |
||||
|
||||
|
Since late February, the Iran war has triggered a new wave of inflation surge in the United States, fueling expectations of further rate hikes. The US government has sold 30-year Treasuries at a yield of 5% for the first time since 2007. The US Treasury on Wednesday (13th) issued USD25 billion of new 30-year bonds, with the high yield at auction reaching 5.046%. Boston Fed President Susan Collins said overnight that if inflationary pressures fail to ease, the Federal Reserve may need to raise interest rates further. Overnight market pricing showed that, based on inflation data, the probability of a US rate hike by April 2027 rose to 80%, up from 56% on Monday (11th). Concerns over further increases in future inflation prompted bidders to demand higher fixed yields as compensation. The oil shock has pushed up a broad range of inflation indicators, including the US Consumer Price Index (CPI) and Producer Price Index (PPI), and has lifted inflation expectations. Bloomberg cited Deutsche Bank rates strategist Steven Zeng as saying that investor demand is expected to emerge once US Treasury yields reach 5%. This level typically makes 30-year US Treasuries more attractive to pension funds and other liability-driven investors. Zeng said the banks base case is that the Federal Reserve has ended its rate-cut cycle but will not raise rates, as long-term inflation expectations remain well anchored. However, he added that if elevated energy prices cause inflation expectations to become unanchored, the market would have to reassess the Feds policy path, in which case Treasury yields could rise sharply. Collins said that although structural changes in the US economy have made it more resilient to energy shocks, the latest round of upward inflation pressure has compounded already persistent price strength, somewhat altering her outlook. She added that keeping inflation expectations stable at the current juncture is critical. (da/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
AASTOCKS Financial News |
||||
Copied to Clipboard
 |
||||
