Treasury retreat eases, traders eye highest 30-year yield since 1999
U.S. Treasury yields were slightly lower on Tuesday, paring losses from the previous session as traders weighed central banks’ response to renewed inflation fears.
The yield on the 10-year U.S. Treasury note, the key measure of U.S. government debt, was down more than 1 basis point at 4.6073% Tuesday morning. The long-term 30-year Treasury bond yield, which is more sensitive to political risks, was last stable at 5.1428%.
The yield on the 2-year Treasury note, which tends to respond appropriately to short-term Federal Reserve interest rate decisions, also fell less than 2 basis points to 4.0695%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
With US 10-year bond yields reaching the highest level in the last 15 months on Monday, treasury bonds took a breather after the yields rose.
A Bank of America survey released Tuesday found that 62 percent of global fund managers expect 30-year Treasury yields to reach 6 percent; This marks the highest level since late 1999 and an increase of approximately 86 basis points from the current level. This compares with just 20% of respondents who said they were targeting a 4% 30-year return.
Yield 10-year German bonds It fell more than 1 basis point to 3.1471% early Tuesday. Return despite relaxation 10 years of UK Gilts At 5.115 per cent, the benchmark for Britain’s government debt is still above 5 per cent.
Yields on long-term government debt in the UK and Germany also remain high. German return 30 year bonds With the participation of England, it was at 3.6836% on Tuesday. 30 years of Gilded Its yield increased by less than 1 basis point to 5.773%.
Jefferies chief economist and strategist Mohit Kumar said the prevailing sentiment in global bond markets was due to the inflationary impact, primarily due to rising energy costs, budget deficit concerns and country-specific political turmoil in the UK.
“Even if we get it [Middle East] deal…oil will not return to pre-war levels. “We think it will be 25-30% higher in six months,” Kumar told CNBC’s “Europe Early Edition” on Tuesday.
Price Brent crude oilOil, the international oil reference, was last seen at $110.38 per barrel, down 1.5%. West Texas Intermediate It remained steady at $108.67.
Then there is the impact of the deficit. “Every government will subsidize households for fuel, which means we borrow more and that puts pressure on the long end of the curve.”
Kumar, however, said the market is currently pricing in rate hikes but this is “not justified” given that inflation is likely to rise just as growth is likely to fall.
