Yields on U.S. Treasuries fell and the curve steepened Thursday as the market sidestepped expectations of faster rate hikes from the Federal Reserve a day after the bank signaled not to be in a hurry. .
The Bank of England’s decision to hold rates, which knocked some returns on European debt down, also helped fuel a rally in US stocks, according to Andrew Richman, senior fixed income strategist at Sterling Capital Management.
The 10-year yield, which rose to 1,609% during the session, then fell to its lowest level since mid-October at 1,509%, marking its biggest downward movement since July 19. Towards the close it was trading with a loss of 5.8 basis points, at 1.5209 percent.
The two-year bond yield, which hit a 19-month high of 0.5640% last week amid heightened expectations of a Fed rate hike in 2022, fell to 0.391% but ended lower than 6.5. basis points at 0.4125 percent.
Tapering begins
The US central bank announced Wednesday after its two-day meeting that it will begin cutting its monthly bond purchases in November with plans to finish them in 2022.
However, he maintained his view that high inflation will be “transitory” and will probably not require a rapid rise in interest rates.
Yield curves reached their highest levels in about a week.
A closely watched portion of the yield curve that measures the gap between the yields on two- and 10-year bonds reached 114 basis points, but then stood at around 110.40 basis points. The spread between the 10-year and 30-year bonds rose 2.20 basis points to 43.70 points.
The yield on the five-year paper, a part of the curve that is sensitive to rate expectations, fell 8.4 basis points to 1.1008 percent.
Reference-www.eleconomista.com.mx