U.S. Treasury yields rose on Wednesday, with the yield on the 10-year bond hitting a multi-year high as investors scanned the latest economic data and weighed the outlook for Federal Reserve interest rates. 10-year treasury bill
The yield rose nearly 5 basis points to 4.897%, rising above 4.9% for the first time since 2007. Meanwhile, the 2-year bond
The yield was unchanged at 5.214%, close to the 2006 level. It is also worth noting that the 5-year government bond
The increase reached as much as 4.937%, which is the highest level since 2007.
Yield and price move in opposite directions, and 1 basis point is equal to 0.01%. Investors weigh new economic data as uncertainty over the Fed’s monetary policy outlook has increased in recent weeks.
Data released Wednesday showed that housing starts accelerated in September, but the pace of growth was slower than expected. Building permits fell this month, but less than economists had predicted.
September retail sales data released on Tuesday rose 0.7% over the month. That was well above the 0.3% economists had expected for the Dow Jones, showing consumer resilience amid rising interest rates and other economic pressures.
The data revived concerns about the outlook for interest rates, and some investors saw it as a sign that interest rates could rise further, or at least stay high for longer. Markets still have a 90% chance that interest rates will remain unchanged when the Fed announces its next monetary policy decision on Nov. 1, according to CME Group’s FedWatch tool, but a rate hike has been a possibility, according to Tuesday’s December data increased.
In recent days and weeks, several Fed officials have said the central bank may not raise interest rates again, especially as rising U.S. Treasury yields worsen economic conditions. Additional comments from policymakers, including Federal Reserve Chairman Jerome Powell, are expected this week, and investors are looking to their comments for clues about policy expectations. The upcoming economic data could also influence the views of investors and Fed officials.
