(Bloomberg) – U.S. Treasury bonds fell again on Wednesday, bringing long-term yields to their highest levels this week and raising inflation expectations as traders continued to price for a more robust economic recovery. pandemic.
The 10-year Treasury’s benchmark yields rose as much as 10.3 basis points to 1.495%, putting them on the road to the highest close since the surprising sale of government debt last Thursday. Meanwhile, a market indicator for the annual inflation rate forecast for the next half decade has exceeded 2.5% for the first time since 2008 – aided by rising oil prices. At least part of the trigger for fixed income losses came from the UK, which said it would sell more bonds than expected as its economy emerged from a deep recession.
Also in the background was Joe Biden’s announcement that sufficient doses of the virus vaccine should be available to all American adults by the end of May, and a report on Wednesday that the president would moderate certain demands for stimulus to try gain support for their virus relief bill. Increased earnings began to attract the attention of Federal Reserve officials, leaving all eyes on an appearance on Thursday by President Jerome Powell.
“The risk is coming back, the stimulus package is likely to be approved and the economy is reopening,” said Michael Franzese, managing partner at MCAP LLC in New York. “The battle is between rates rising super-fast and a Federal Reserve that is trying to keep the market steady and may try to slow down the momentum of the economic recovery and trade to something more manageable.”
The first signs of inflation were evident in the data from the Institute for Supply Management this week: paid price measures have jumped to their highest levels since 2008.
A major trade on Wednesday in 10-year Treasury options and the sale of futures also fueled the jump in yields, as well as the supply of heavy corporate bonds.
For more articles like this, visit us at bloomberg.com
Sign up now to stay up to date with the most trusted business news source.
© 2021 Bloomberg LP