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Sunday, April 2, 2023

US bond yields soar and hit new three-month highs

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Yields extended their gains after data showed US business activity picked up unexpectedly in February, reaching its highest level in eight months.

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On Wednesday, the Fed will publish the minutes of its meeting on January 31 and February 1, which will be scrutinized for further indications of the extent to which the US central bank is likely to continue raising rates.

The yield on the 10-year notes hit 3.951%, the highest level since November 10 and well above the four-month low of 3.321% on January 19. The return of two-year papers touched 4.725%, its highest level since November 8.

The yield curve between the two-year and 10-year bonds remained deeply inverted at -77 basis points, signaling concerns about an impending recession. The Treasury bond market was closed Monday for the Presidents’ Day holiday.

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Yields are also rising as banks and investors prepared to issue $140 billion in new debt this week. This will include $42 billion in two-year notes on Tuesday, $43 billion in five-year notes on Wednesday and $35 billion in seven-year notes on Thursday.

Source: Ambito

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