[채권] Interest rates continue to rise… Inflation expectations and bidding burden

[뉴욕=뉴스핌] Correspondent Kim Min-jung = US Treasury yields continued to rise on the 8th (local time). As the U.S. Senate passed an additional stimulus plan for the new coronavirus infection (Corona 19) worth $1.9 trillion, expectations for economic improvement were reflected in bond prices.

According to Reuters, the international benchmark 10-year Treasury bond rate as of 3:13 p.m. Eastern time was 1.5942%, up 4.0bp (1bp=0.01% points) from the previous day. Bond prices move in opposition to interest rates.

The 30-year interest rate rose 1.9bp to 2.3067%, and the two-year interest rate, which is sensitive to policy interest rates, rose 2.2bp to 0.1626%, respectively.

After Fed chairman Jerome Powell failed to appease the market last week, Treasury Secretary Janet Yellen has stepped up to ease market anxiety.

In an interview with PBS News Hour last week, Minister Yellen diagnosed that the recent surge in government bond yields reflects a strong recovery, not inflation.

US Treasury Department.[사진=블룸버그통신] 2021.02.09 [email protected]

In an interview with other broadcasters on the same day, Minister Yellen answered the question whether the Joe Biden administration’s $1.9 trillion-dollar Corona 19 stimulus plan would cause inflation.

But Raymond James’ market strategist Ellis Piper told Reuters that “everyone is still concerned about rising inflation.”

“The only thing that’s fighting this,” added Pfeiffer’s strategist.

In its report, TD Securities pointed out that “if the sale of bonds continues, we could repeat the 2013 experience, which could lead to bond yields going above an acceptable level.”

Some experts analyzed that the market is skeptical about the average price target system (ATI) introduced by the Fed in August last year.

“The market still hasn’t fully absorbed the average price target system,” said Seabass Chun Galli, senior macro strategist at Nodeer Asset Management, telling the Wall Street Journal that last week’s strong employment report and this week’s massive 10-year Treasury bid are testing the market Explained.

On this day, the bond market reflected the inflation forecast for the next 10 years at 2.24%. This is the highest since the summer of 2014. Short-term inflation expectations rose faster, reflecting the inflation rate of 2.55% over the five years.

“If real interest rates start to rise more rapidly around the short term, it represents market skepticism about the Fed policy,” said Neil Shearing, chief economist at Capital Economics. “It means we don’t believe in the Fed’s promise to keep the policy rate of zero until now.”

Investors are paying attention this week to bid for $120 billion in 3-year, 10-year, and 30-year Treasury bonds. In particular, this week’s bidding, which took place after 7-year bidding, which was sluggish in the last week, is expected to have a significant impact on the market atmosphere.

“We will be watching 10-year bids on the 10th, and this will be as important as the Consumer Price Index (CPI) indicator,” said Thomas Costeg, senior economist at Pictet Wells. Ahead of this, the Fed members are in a period when they don’t speak publicly, and I’m a bit nervous,” he said.

The difference in interest rates for 2-year and 10-year bonds was 143.16bp. Earlier, the 2-year and 10-year spread over the weekend showed a steeper yield curve, widening the largest since September 2015.

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