10-year Treasury yield falls as traders bet Fed rate increase can tamp down inflation — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Federal Reserve raised its overnight lending rate 25 basis points to a 3.75%-4% range, its first rate hike in three years, up from 3.5%-3.75%
- 10-year Treasury yield fell more than 3 basis points to 4.957% after hitting a 2007 high on Tuesday; the 30-year dropped more than 4 bps to 5.322% and the 2-year fell more than 4 bps to 4.619%
- Fed Chair Kevin Warsh is set to hold a 2:30 p.m. ET news conference, with the policymaking committee stating "inflation remains elevated" and that the move supports "a timelier return to the Committee's 2 percent goal"
- Kay Haigh, Goldman Sachs Asset Management's global head and CIO of fixed income and liquidity solutions, said the Fed does not "envisage an aggressive tightening cycle" and expects the Fed to skip October's meeting due to its proximity to the midterm elections, with one more hike in December as the base case
- August consumer price index figures showed hot inflation, compounded by oil prices surging on U.S.-Iran escalations, which had been pushing the long end of the Treasury curve higher in recent weeks
Why it matters: Long-end borrowers caught a break: the 30-year yield fell to 5.322% after hitting a 2007 high Tuesday, and Goldman Sachs expects just one more December hike with October skipped ahead of midterms. For Kevin Warsh's debut hike as Fed Chair, market acceptance matters more than the 25 bps itself, given August CPI and Iran-driven oil were already pressuring inflation expectations.
Ask SkimNews
