Home Business Yields rise as Powell Fed remains hawkish

Yields rise as Powell Fed remains hawkish

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NEW YORK — Yields on U.S. Treasuries continued to rise

Thursday after Federal Reserve Chairman Jerome Powell reiterated

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that the US central bank’s priority is to fight inflation,

ahead of next week’s highly anticipated consumer price data.

Powell said the Fed is “strongly committed” to fighting back

inflation, but there is hope that we can do without it

the “very high social costs” involved in previous control campaigns

rising prices.

“It was in line with his Jackson Hole statement — a necessity

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raise rates more to reduce inflation. That’s really it

the essence of the message was,” said Gennadz Goldberg, an

interest rate strategist at TD Securities in New York.

Chicago Fed President Charles Evans also said Thursday

that reducing high inflation is “task one” and to do so

The Fed may “very well” raise interest rates by another 75 basis points

points this month.

Fed officials have been going into blackout periods before

their meeting on September 20-21, when the Fed is expected to raise

rates by another 75 basis points, increasing the federal funds rate

to 3.0% to 3.25%.

Data on consumer price inflation for August will be released on Tuesday

come after the blackout period begins.

Data on Thursday showed employment remained strong. The

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the number of Americans filing new claims for unemployment benefits

fell last week to a three-month low.

Concerns that central banks will remain dovish

inflation will remain consistently high if energy prices rise

the approach to winter increased the yield of government bonds

worldwide in recent weeks.

The European Central Bank raised the key on Thursday

interest rates by an unprecedented 75 basis points and gave the signal

further hikes, prioritizing the fight against inflation, even if

the bloc’s economy is headed for a likely winter recession.

Yields fell earlier on Thursday as oil prices fell

China has extended lockdown measures to combat COVID-19

increased concern about the slowdown in economic activity spread

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around the world will hit the demand for fuel.

The rise of the US currency against the Japanese yen, the euro and

other currencies also added to the demand for US bonds, as

investors are looking for a place to put their cash in dollars

assets.

The yield on 10-year notes rose by three basis points

points to 3.292%. They rose from a four-month low

2.516% as of August 2, but held below an 11-year high

3.498% reached on June 14.

Two-year bond yields rose by four basis points

3.491%, below the 3.551% level reached last Thursday

the highest since November 2007.

The yield curve between two-year and 10-year notes

remained inverted at the level of minus 20 basis points, an

an indicator that a recession is likely in the next one or two

years. However, the inversion is less severe than minus 56

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the level of basis points reached on August 10.

Inflationary expectations also fell. Breakeven rates on

five-year Treasury Inflation-Protected Securities (TIPS)

hit a two-month low of 2.50%, indicating

expectations of 2.50% inflation per year for the next five

years.

Thursday, September 8, 15:00 New York / 19:00 GMT

Price Current Net

Profitability % change

(bps)

Three-month bills 2.965 3.0286 -0.018

Six Month Bills 3.3625 3.4678 0.023

Two-year banknote 99-139/256 3.4911 0.044

Three-year banknote 98-216/256 3.5431 0.049

Five-year note 98-196/256 3.3966 0.037

Seven-year note 98-112/256 3.3782 0.033

10-year note 95-112/256 3.2921 0.027

20-year bond 95-140/256 3.6925 0.034

30-year bond 91-200/256 3.442 0.037

DOLLAR SPREADS SWOP

Latest network (bps).

A change

(bps)

2-year dollar swap 36.00 -1.25

distribution

3-year dollar swap 11.00 -2.00

distribution

5-year dollar swap 5.75 -0.75

distribution

10-year dollar swap 7.00 -0.50

distribution

30-year dollar swap -32.25 0.00

distribution

(Reporting by Karen Brettel; Editing by Jonathan Oatis and

Nick Zeminski)

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