by Treasury yields have risen again on Thursday across the board. The 2-year bond yields have now touched a 15-year height. This followed a new resonance of recession fears across the global financial market.
Treasuries Rise
The 2-year Treasury yields are very sensitive to policy changes. The yields were last around 4.612% after they rose by 6 basis points. The level they reached was last seen in 2007.
The benchmark ten-year Treasury yield, on the other hand, rose to 4.18%. It reached levels that were last seen more than 14 years ago on Thursday. It went up last by 3.8 basis points as it reached 4.167%.
Note that prices and yields move inversely to one another. 1 basis point is also equal to 0.01%.
Housing statistics and building permits report for September in the US was reported lower than expected on Wednesday. Investors generally took it as a signal of an impending recession in the real estate space.
A lot of them have expressed concerns about the country’s economic contraction. This is a result of the Federal Reserve’s continuous interest rate increase. The Reserve embarked on it as a means of fighting inflation.
Other leading central banks, in North America and Europe especially, have adopted the same strategy. It then effectively puts global finance on the trajectory of a recession if pushed too hard.
Watching Out for More
The President of the Chicago Feds, Charles Evans, spoke to the press on Wednesday. He said inflation is too high at the current rate. According to him, the central bank needs to keep its hawkish monetary policy.
Evans, however, acknowledged that increasing rates further would put pressure on the economy. The Federal Reserve will have its next policy meeting on the 1st and 2nd of November. The market is currently expecting another 75 basis points rate increase at the meeting.
The Federal Reserve Chairman, Jerome Powell, said interest rates will keep rising till the job is done. He gave this assurance at the Jackson Hole conference held in September.
Traders will watch out for more information about housing in the US next Wednesday. Reports on existing home sales for September are expected. Traders will also give more attention to statements coming from officials of the Federal Reserve.
Intense inflation and other concerns over a recession are weighing on economies worldwide. The German ten-year yield rose by 8 basis points to reach 2.448%. And the British ten-year yield rose by 9 basis points to reach 3.964%.
