US bond yield on track for biggest rise since 2013

Benchmark 10-year US Treasuries were on Friday to end the year with their biggest yield increase since 2013 as investors brace for the likelihood that the Federal Reserve will raise interest rates as soon as may.

The United States central bank is under pressure to raise rates in order to curb an acceleration in inflation that is proving to be more stubborn than expected, and as the economy recovers from the Covid-19-related shutdowns.

Fed fund futures traders forecast one rate hike for May and nearly three by the end of 2022.

The return of the 10-year notes has risen 59 basis points in the year, placing it on the path of its highest rise since 2013, when it advanced 127 basis points.

Two-year note yields, which are highly sensitive to rate movements, have gained 60 basis points for the year, heading for their biggest rise since 2018.

The yield curve between the two-year and 10-year notes traded at 78 basis points. The curve is only slightly flatter than where it ended last year, at 79 basis points.

The biggest driver this year has been five-year papers, which have climbed 90 basis points, their biggest improvement since 2013.

The Fed will publish the minutes of its meeting on December 14 and 15 next week, which will be evaluated in search of new indications that the entity could act sooner to curb upward pressure on prices.

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