NEW YORK- US Treasury 10-year yields climbed to a 16-year peak, boosted by technical factors and resuming a months-long sell-off fueled by expectations that the Federal Reserve will keep interest rates high for some time to lower inflation to its 2 percent target.
US benchmark 10-year yields hit a fresh top of 4.462 percent , the highest since October 2007. It was last up 5.4 basis points (bps) at 4.611 percent .
The US two-year yield which moves in line with interest rate expectations, rose from two-week lows hit earlier to trade 6.0 bps higher. The yield’s two-week low was 5.046 percent
That narrowed the gap between the two- and 10-year yield to -51.30 bps the tightest spread since May. This suggested that the market is pricing in expectations the Fed is nearing the end of its tightening cycle. That spread was last at -52.70 bps.
“Market positioning is a big factor in this sell-off, but the biggest driver is still the Fed’s ‘higher-for-longer’ stance,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.
“We continue to see a re-pricing of Fed rate cut expectations. If you look at rate pricing for 2024, markets are pricing in 75 basis points of cuts, from over 100 basis points a couple of weeks ago,” he added.
