- Yields on the 10-year Treasury bond fall to 1,582% amid a climate of risk aversion.
- JP Morgan expects a rate hike of 0.25% for the third quarter of 2022.
US 10-Year Yield it is down 0.57% when the American session begins, two basis points below 1.582% at press time. In the overnight session, US bond yields remained subdued, hovering around 1.60%, however, sudden swings in market mood led to a drop to 1.573%, while some US equity indices fell between 0.14% and 0.52%.
The yield on the 2-year US Treasury has gained 1bp, to 0.504%, while the 20-year and 30-year yields followed the steps of the 10-year, falling 2bp and a point 1bp respectively.
Initial US Unemployment Claims extend their decline, showing the resilience of the US job market.
On the macroeconomic front, the US Bureau of Labor Statistics (BLS) reported that Initial Unemployment Claims for the week ended November 13 were 268,000, 8,000 more than expected, although 1,000 less than previous week, which was revised down to 269,000. That seemed to cause no reaction in returns and was unchanged throughout the announcement.
Also, at the time of writing, New York Fed Chairman John Williams made remarks and said they are seeing broader-based increases in inflation, according to Reuters. Williams stated that we see a rebound in core inflation in the US.
Despite falling yields, investors seem convinced that the Federal Reserve would have to pull the trigger to deal with inflation, raising rates sooner rather than later, in line with market expectations.
JP Morgan expects the Fed to raise rates by 25 basis points at the beginning of the third quarter, a conservative call compared to Deutsche Bank, which anticipates the first hike in July 2022. They added that they expect a 25 basis point hike in each quarter. until the real returns reach zero. On Thursday, real 10-year yields were at -1.12%.
Looking ahead, bond traders should keep an eye out for more statements from Fed members throughout the day. Chicago Fed Chairman Charles Evans will make remarks at 19:00 GMT
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