10-year US Treasury yield rises 1.96% ahead of inflation data


Yield on the 30-year Treasury bond also jumped nearly 4 basis points to 2.256 percent

Representative Image

Representative Image

The benchmark 10-year US Treasury yield jumped 4 basis points to 1.96 percent on February 8, as investors look ahead to inflation data which is scheduled to be revealed later this week, CNBC reported.

Yield on the 30-year Treasury bond also jumped nearly 4 basis points to 2.256 percent. An auction for three-year Treasury bonds was held on February 8.

Priya Misra, head of global rates strategy at TD Securities told CNBC that the yield rise is a “global rate backup” as central banks across the world move away from accommodation and this in turn is pushing up interest rates.

“…but really the market is dealing now with the twin forms of tightening: the balance sheet as well as rate hikes,” Misra added.

The US Labor Department is scheduled to release its consumer price index (CPI) data for January on February 9. The data is expected to show 0.4 percent price rise, and a 7.2 percent jump year-on-year (YoY).

It also comes after January jobs data showed “stronger-than-expected” growth; and December trade deficit numbers came in at $ 80.7 billion against expectations of a $ 82.8 billion drop that Dow Jones economists were expecting.

The numbers have led to speculation that the US Federal Reserve (US Fed) will likely be “more aggressive” in hiking rates. Bank of America said on February 7 that the Fed could implement seven quarter-percentage-point interest rate hikes in 2022.

“… to correct its mistake in assessing both the scale and sustainability of the inflation shock, the Fed is now set to normalise its monetary policy by combining tapering, hiking and quantitative tightening in the same year,” believes Guilhem Savry, head of macro and dynamic allocation at Unigestion.

He added that it “now makes sense” that the Fed may take to tightening and remove its accommodative stance as, “timing and calibration has surprised financial markets and raised the risk of policy mistake.”

Yields move inversely to prices and 1 basis points (bps) = 0.01 percent.

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