Gold Ten Data, August 4 News The U.S. Treasury bond market has fluctuated wildly in recent weeks, but one trend seems to be standing still: the inversion of the yield curve continues as fears of a recession outweigh worries about inflation deepen.
The 10-year Treasury yield fell as much as 38 basis points below the 2-year yield on Wednesday, bringing the inversion of the curve to its worst level since August 2000 . Yields on both 2-year and 10-year Treasuries traded within a range of at least 10 basis points on Wednesday for the fifth straight session.
U.S. 10-year Treasury yields climbed 10 basis points to 2.85% in early U.S. trade on Wednesday, while short-term Treasury yields rose even more sharply, as traders placed a 50% chance of the Fed raising rates by 75 basis points next month. However, as U.S. stocks were about to close, the 2-year U.S. Treasury yield was close to the previous session’s closing level, while the 10-year U.S. Treasury yield fell to 2.70%. The decline put pressure on the dollar, with the Bloomberg dollar index falling back on the day after rising nearly 0.4% in the session.
George Goncalves, head of U.S. macro strategy at MUFG, said:
“U.S. bond yields rose to levels that looked attractive, buyers started buying long-term U.S. debt, and cash was put into fixed income products. There seems to be no catalysts at work, but market rate expectations are difficult to maintain higher levels The fact that investors are skeptical about the veracity of the Fed delivering on its hawkish rhetoric suggests that. ”
However, even with the late Wednesday retreat, key benchmark U.S. Treasury yields remained above Monday’s levels, holding on to most of Tuesday’s gains.
A series of hawkish comments from Fed officials and stronger-than-expected U.S. services data pushed Treasury yields higher early on Wednesday, and U.S. stocks also rose on the day .
This is just the latest in a string of intraday reversals in the market recently. Intraday volatility in markets has increased in recent months as uncertainty over economic growth, inflation prospects and central bank policy has risen, along with various measures of volatility.