Treasury bond yield rises this Monday, October 16, due to the increase in US public debt issues and the imminence of an Israeli ground offensive in the Gaza Strip, which keeps the fixed income market in a cautious situation.
He 10-year Treasury bond yield rose 8.9 basis points to 4.719%, while the two-year return, which reflects interest rate expectations, rose 4.2 basis points to 5.096%.
War effect: 30-year Treasury bonds soar
He 30-year Treasury bond yield rises 9.3 basis points, to 4.872%. A closely watched part of the curve Treasury yieldswhich measures the difference between the return on two- and 10-year bonds, considered an indicator of economic expectations, stood at -38.2 basis points.
The breakeven rate of US Treasury inflation-protected securities (TIPS) for five years it stands at 2.305%, while for 10 years it stood at 2.362%, which indicates that the market sees an average inflation of 2.4% annually for the next decade.
Conflict in the Gaza Strip: how does it impact Treasury bonds?
The Israeli forces continued their bombardment in Gaza after diplomatic efforts to agree a ceasefire to allow foreign passport holders to leave and aid to enter the besieged Palestinian enclave failed.
The airstrikes were the most intense to datewhen the conflict was entering its tenth day and an Israeli ground offensive in the densely populated coastal strip was believed to be imminent.
“Certainly, we are in wait mode. The fact that there hasn’t been a rally in bonds so far (Monday) morning, we haven’t seen a flight to safety,” he said Will Compernollemacroeconomic strategist FHN Financial in New York.
He increase in the supply of Treasury bondsthe recognition that the Federal Reserve will keep the interest rates higher for longer and the fact that the stock market is doing well are pushing yields higher, he said Compernolle.
According to Compernolle, many of the big buyers, such as banks, are not bidding normally because they are cautious about the possibility of interest rates rising. “The bids for these bonds are not seen that would be consistent with the fundamentals because many of the large buyers are very hesitant.
Issuance of public debt: the Treasury will tender 218,000 million in bills plus bonds
He American treasure expects to sell 75,000 million dollars in 13-week bills and 68,000 million dollars in letters at 26 weeks on Monday, and $75 billion in 42-day bills on Tuesday.
In addition, on Wednesday it will auction $13 billion in 20 year bonds and on Thursday 22,000 million dollars in Five-Year Treasury Inflation-Protected Securities (TIPS).
Source: Ambito
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