US Treasury Yields Seen Heading Lower but Strategists’ Conviction Wavering
Long-dated borrowing costs climbed as oil rose and traders awaited Wednesday’s July consumer price index report, with the 10-year yield near an 18-month high.
- Following claims by President Donald Trump that Washington now controls the Strait of Hormuz, Treasury yields climbed slightly on Tuesday as investors focused on the July CPI report due Wednesday.
- Energy shocks since the Iran war began in late February have rattled bond markets, pushing the 30-year Treasury yield above 5.20 per cent as inflation remains well above the Federal Reserve's 2% target.
- Financial markets have priced out rate cuts entirely, betting on at least one hike this year, while an 82% majority of strategists in a Reuters poll expect the 10-year Treasury note to rise further.
- Treasury Secretary Scott Bessent aims for 10-year yields below 4 per cent, but doubts about Fed Chair Kevin Warsh's inflation strategy complicate this goal as Bessent intervened to support the Japanese yen.
- Heavy upcoming Treasury issuance on a nearly $40 trillion debt pile threatens to keep long yields elevated. Vanguard's Alex Payne warned, "If inflation doesn't move closer to the Fed's 2% target, in the absence of forward guidance the market will need to see action.
12 Articles
12 Articles
US yield curve twists expose Trump's and Bessent's rate dilemma
U.S. bond yields are surging to unprecedented levels, putting the Trump administration in a tough spot. While President Trump pushes for lower interest rates, Treasury Secretary Bessent prioritizes managing inflation and bond yields. Faced with competing pressures, the Federal Reserve must decide between boosting rates to maintain price stability or decreasing them, risking inflation.
The Dow Jones fell 0.11%, the Nasdaq 0.32%, and the broader S&P 500 0.06%. "Crude oil prices climbed throughout the session, thus dampening the strength of the stock market," summarized analysts at Briefing.com. Oil prices surged nearly 5% on Monday, driven by fears of a diplomatic impasse between Washington and Tehran, which have diverging conditions for reopening the strategically important Strait of Hormuz. Following the momentum in oil pric…
The stock indexes in New York closed this Monday (10) in a slight fall, as investors again showed discomfort with the rise in oil prices and income from US Treasury bonds (Treasuries). The concern occurs days before the disclosure of American inflation on Wednesday (12), which can mark the bets for the trajectory of monetary policy in the United States in the short term. The Dow Jones index dropped 0.11%, to 53,975.98 points, while the S&P 500 r…
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