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US 10-Year Treasury Hits 4-Year High Above 2.9%

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US 10-Year Treasury Hits 4-Year High Above 2.9%

In the Mid of February, it is observed that the 10-year treasury yield clawed its way back to a new four-year high after an equity sell-off that it helped cause sent its rate back down. It was found that the yield on the benchmark 10-year Treasury note was slightly higher at 2.860 percent. On the other hand, the yield on the 30-year Treasury bond also ticked up to 3.146 percent. Bond yields move inversely to prices. On 19 February, the 10-year Treasury yield rose to 2.902, its highest level in more than four years as concerns over inflation continued. Believing the fact, the 30-year’s bond yield rose to its highest level since March 14, when the bond yielded as high as 3.215 percent. It is expected by the traders that Wednesday’s Consumer Price Index (CPI) for January will validate fears that inflation is ramping up.

CPI growth of 0.3 percent month over month and 1.9 percent spell over spell is expected by the investors. The current state of the bond market is not offering investors the safe option that they usually have when stock prices come down.

Whenever there is a usual rotation from bull to bear, it is preferred to go straight into government bonds. However, this is the problem. Experts believe that with the increasing interest rates because the economy is strong and inflation is picking up, government bonds have become not the safest asset class on the planet but toxic waste.

Therefore, it is said that you are sort of trapped into equities even though you know they are not good value. On mid of February, the yield on the 10-year soared over 2.88 percent, clinching a 4-spell high and sparking a week of equity turmoil. Investors are worried that rising inflation could undermine the value of debt’s fixed payments. However, the equity traders headed for the exits as yields rose, encouraging bond purchasing and sending yields off their highs.

Some of the highlights are as below;

  • The 10-year Treasury yield rose above 2.9 percent by hitting a four-spell high. This was observed when the last week’s equity sell-off spurred bond purchases.
  • The 30-year bond yield rose to its highest level since March.
  • Traders are waiting for new consumer price data coming Wednesday.

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