US Treasury yields have surged to levels not seen since August 2007, amid expectations of continued monetary tightening by the Federal Reserve and a robust labor market. On Tuesday, the 10-year yield climbed to a staggering 4.785%, while the 30-year bond yield reached 4.874%. This significant increase in yields reflects investors’ anticipation of an extended Federal Reserve’s monetary policy adjustment in response to record inflation rates and a strong labor market.
The central bank has been wrestling with a record inflation rate that stands at a 40-year high. Since March 2022, it has raised interest rates 11 times, although it refrained from doing so twice. These rate hikes have heightened fears of a potential recession due to the elevated cost of borrowing. Despite this, projection materials suggest further rate increases could occur in one of the two remaining meetings in 2023, with fewer cuts anticipated for next year.
The labor market has also contributed significantly to these developments, with job openings in August amounting to 9.61 million.
Tuesday also saw a notable increase in other Treasury yields. The 30-year yield rose by 2.65% in a single day, and the yield also experienced a significant spike. This uptick in yields across various maturities underscores the broader trend of rising interest rates and inflation concerns within the US economy.
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