binance left Coinmarketcap net_left adver left

Analysis-Surging benchmark Treasury yields in reach of 2% on hawkish Fed, inflation fears

Friday, January 7, 2022
Analysis-Surging benchmark Treasury yields in reach of 2% on hawkish Fed, inflation fears © Reuters. FILE PHOTO: Federal Reserve Chair Jerome Powell testifies before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill in Washington, U.S., November 30, 2021. REUTERS/Elizabeth Frantz/Fil

By Karen Brettell and Gertrude Chavez-Dreyfuss

(Reuters) - Benchmark U.S. Treasury yields have surged to their highest level in two years, as investors fret over a more hawkish Federal Reserve, surging inflation and a deluge of supply and this week's leg up have put them in reach of the psychological 2% level.

Benchmark 10-year yields on Friday jumped to 1.801%, the highest since January 2020. They are up from a low of 1.491% at year-end and 1.353% on Dec. 20.

Analysts say that if it holds above current levels, the 2% area is likely up next.

The latter half of 2021 saw several rallies in the benchmark yield, which moves inversely to bond prices, fail around current levels as markets were hit by worries over COVID-19, economic growth and as investors sought out U.S. debt for its relatively higher yields.

Investors increasingly believe this time may be different, not least because a hawkish Fed appears ready to pull out the stops in its fight against surging inflation.

Yields took an extra leg higher on Friday after the Labor Department's closely watched employment report suggested the jobs market was at or near maximum employment despite a payrolls miss.

They had also jumped after minutes from the Fed's December meeting released on Wednesday showed that officials had discussed shrinking the U.S. central bank’s overall asset holdings as well as raising interest rates sooner than expected to fight inflation.

“This talk about letting the balance sheet runoff and envisaging a future where there are no more Fed purchases ... people are going to prepare for that now,” said Tom Simons, a money market economist at Jefferies.

Other factors pressuring yields include corporate debt issuers locking in rates as they rush to beat rate hikes, and a broad market repricing of bonds after safe-haven demand helped to push yields too low relative to fundamentals at year-end.

Demand for bonds relative to supply is also expected to worsen this year as central banks pare back purchases. The Fed only two months ago was buying an extra $120 bln a month in bonds.

HAWKISH FED

The Fed is under pressure to hasten the removal of its extraordinary accommodation as surging price pressures prove more stubborn than previously thought. The rapid spread of the Omicron coronavirus variant may also add to supply disruptions, potentially increasing upward pressure on inflation.

Data on Friday showed that the unemployment rate tumbled to a 22-month low of 3.9% from 4.2% in November. The second straight big monthly decline occurred even as more people entered the labor force. Wages increased solidly, underscoring labor market tightness.

It came after a surprisingly strong ADP National Employment Report on Wednesday.

“It looks like the conditions for Fed rate hikes have pretty much been met with the labor market now pretty robust,” said Kim Rupert, managing director in global fixed income analysis at Action Economics, though she noted the holiday season could have created data anomalies.

Fed funds futures are now fully pricing in three rate hikes by the end of 2022, with the first increase likely as soon as March.

SUPPLY-DEMAND BALANCE

A rush by corporates to borrow in the bond markets before the Fed hikes rates is adding to Treasury weakness as issuers enter into agreements to lock in rates for the sales.

"It looks like companies are trying to raise debt as soon as possible. As rates rise, there's going to be more and more discussions of issuing debt now rather than wait to do it at a better level," said Tom di Galoma, a managing director at Seaport Global Holdings in New York.

The global bond supply-demand balance is also set to worsen this year as central banks, including the Fed and the European Central Bank (ECB), continue to reduce bond purchases, which could put more upward pressure on yields.

JPMorgan (NYSE:JPM) analysts including Nikolaos Panigirtzoglou said in a report on Wednesday that if the Fed begins winding down its balance sheet after just two hikes in September, the market might need to absorb an additional $150 billion of net Treasury issuance in the last quarter of 2022.

If Congress passes new spending in the form of the Build Back Better Act, net issuance could further climb by around $200 billion this year, which accounts for $250 billion in new spending, and $50 billion in taxes.

JPMorgan is forecasting a deterioration of $1.1 trillion in global bond supply and demand this year relative to 2021, which could push yields in the Bloomberg Barclays (LON:BARC) Global Aggregate index upwards by 30 basis points.

Leave your comment
ig right nyse right Neteller adver right
APPROVED BROKERS
rakuten_main right top net_home_top ig_main right top Binance _ main right top fbs_main right top tifia_main right top
21-01-2022 03:02:02 (UTC+7)

EUR/USD

1.1336

+0.0026 (+0.23%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (7)

Sell (1)

EUR/USD

1.1336

+0.0026 (+0.23%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (7)

Sell (1)

GBP/USD

1.3568

-0.0027 (-0.20%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

USD/JPY

113.89

-0.20 (-0.18%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (1)

AUD/USD

0.7194

-0.0031 (-0.43%)

Summary

Neutral

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (3)

Sell (3)

USD/CAD

1.2519

+0.0016 (+0.13%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

EUR/JPY

129.10

+0.06 (+0.05%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (6)

Sell (2)

EUR/CHF

1.0367

+0.0003 (+0.03%)

Summary

Neutral

Moving Avg:

Buy (9)

Sell (3)

Indicators:

Buy (2)

Sell (7)

Gold Futures

1,839.25

-3.35 (-0.18%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (1)

Sell (6)

Silver Futures

24.560

-0.156 (-0.63%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (2)

Sell (5)

Copper Futures

4.5360

-0.0465 (-1.01%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (3)

Sell (5)

Crude Oil WTI Futures

84.17

-1.38 (-1.61%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (9)

Brent Oil Futures

87.12

-1.26 (-1.43%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (8)

Natural Gas Futures

3.937

+0.135 (+3.55%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

US Coffee C Futures

242.75

-1.70 (-0.70%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (10)

Euro Stoxx 50

4,237.25

-62.36 (-1.45%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (9)

Sell (0)

S&P 500

4,482.73

-50.03 (-1.10%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (8)

DAX

15,696.97

-215.36 (-1.35%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (0)

FTSE 100

7,501.00

-84.01 (-1.11%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (10)

Sell (0)

Hang Seng

24,897.87

-54.48 (-0.22%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (1)

Sell (3)

US Small Cap 2000

2,024.04

-38.75 (-1.88%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (2)

Sell (7)

IBEX 35

8,695.55

-119.05 (-1.35%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (9)

Sell (0)

BASF SE NA O.N.

67.440

0.000 (0.00%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

Bayer AG NA

52.37

-0.33 (-0.63%)

Summary

Neutral

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (3)

Sell (3)

Allianz SE VNA O.N.

222.53

-2.27 (-1.01%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (7)

Sell (1)

Adidas AG

255.65

+0.00 (+0.00%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

Deutsche Lufthansa AG

6.972

-0.121 (-1.71%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (10)

Siemens AG Class N

146.05

-0.85 (-0.58%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (7)

Sell (1)

Deutsche Bank AG

11.519

-0.157 (-1.34%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (4)

Sell (3)

 EUR/USD1.1336↑ Buy
 GBP/USD1.3568↑ Sell
 USD/JPY113.89↑ Buy
 AUD/USD0.7194Neutral
 USD/CAD1.2519↑ Buy
 EUR/JPY129.10↑ Buy
 EUR/CHF1.0367Neutral
 Gold1,839.25↑ Sell
 Silver24.560Neutral
 Copper4.5360Neutral
 Crude Oil WTI84.17↑ Sell
 Brent Oil87.12↑ Sell
 Natural Gas3.937↑ Buy
 US Coffee C242.75↑ Sell
 Euro Stoxx 504,237.25↑ Buy
 S&P 5004,482.73↑ Sell
 DAX15,696.97↑ Buy
 FTSE 1007,501.00↑ Buy
 Hang Seng24,897.87Neutral
 Small Cap 20002,024.04↑ Sell
 IBEX 358,695.55↑ Buy
 BASF67.440↑ Buy
 Bayer52.37Neutral
 Allianz222.53↑ Buy
 Adidas255.65↑ Sell
 Lufthansa6.972↑ Sell
 Siemens AG146.05↑ Buy
 Deutsche Bank AG11.519Neutral
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,125/ 6,165
(10/ 10) # 1,126
SJC HCM6,120/ 6,180
(10/ 10) # 1,139
SJC Hanoi6,120/ 6,182
(10/ 10) # 1,141
SJC Danang6,120/ 6,182
(10/ 10) # 1,141
SJC Nhatrang6,120/ 6,182
(10/ 10) # 1,141
SJC Cantho6,120/ 6,182
(10/ 10) # 1,141
Cập nhật 21-01-2022 03:02:06
Xem lịch sử giá vàng SJC: nhấn đây!
ↀ Giá vàng thế giới
$1,837.72-1.36-0.07%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2437024850
RON 95-II,III
E5 RON 92-II2315023610
DO 0.05S1823018590
DO 0,001S-V1858018950
Dầu hỏa1713017470
ↂ Giá dầu thô thế giới
WTI$84.31+1.371.62%
Brent$86.60+0.020.02%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.450,0022.760,00
EUR24.965,0926.364,70
GBP29.963,4031.243,06
JPY192,94204,24
KRW16,3919,97
Cập nhật lúc 14:55:15 21/01/2022
Xem bảng tỷ giá hối đoái
binance main right Fxpro Main Right aetos main right adver main right