The returns of the Treasury bond of the US are on the rise this Monday, after an agreement to avoid a partial closure of the Government the demand for debt shone, especially before the publication of thes key employment data At the end of the week.
The yield of the benchmark 10-year Treasury bonds rises 7 basis pointsstanding in the 4.641%. Last Thursday, it reached 4.688%, its highest level since October 2007. Returns have risen 48 basis points in September, marking the largest monthly increase in a year.
Interest rate-sensitive two-year bond yields are gaining 6 basis points to 5.110%. They remain below the 5.202% reached on September 21, their highest level since July 2006.
The yield curve between two- and 10-year bonds is last at -47 basis points, showing the current market perception of the economic outlook.
Over the weekend, the US Congress passed a stopgap funding bill with overwhelming Democratic support, following a retraction by Republican House Speaker Kevin McCarthy.in response to the prior demand of the hard-line members of his party.
“If we had had a shutdown, that would have really put the Fed in a really difficult situation for their November meeting,” says Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston. “Essentially, they would have had to rule out any possibility of any kind of Fed action if they didn’t have data on which to base their next move.”
Bonds and Fed: the data that the market looks at
The Fed announced last month that it could vraise interest rates again in their fight to bring inflation closer to its 2% annual target and is likely to keep rates high for longer.
Federal Reserve Fund futures traders see a probability of 28% of a rate hike in November and 45% in Decemberaccording to CME Group’s FedWatch tool.
This week, comments from Fed officials, including the chairman Jerome Powell Later on Monday, they will be watched for new clues on future rate moves.
Market attention this week will be focused on the September jobs report, which is due out on Friday, and is expected to show that employers added 163,000 jobs during the month.
Source: Ambito
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