TREASURIES-Two-year yields hit 18-month high as energy costs stoke inflation worries

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SINGAPORE, Oct 12 (Businesshala) – Two-year Treasury yields rose to an 18-month high on Tuesday as investors sold off US debt, believing that rising energy prices would fuel inflation and push interest rates down. The pressure on the Federal Reserve to increase will increase. .

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Prices of gas, coal, oil and other commodities have risen in recent weeks, and there is increasing evidence that costs are flowing through supply chains.

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Two-year yields rose 3.6 basis points to 0.3560%, before dipping slightly to 0.3497%, following the Columbus Day holiday in the United States on Monday, as trade resumed in Asia.

This extended the two-year treasury sell-off for the sixth consecutive session. The yield was at its highest level since late March 2020, when investors sold off debt in the days after the Fed slashed its benchmark rate to near zero.

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“This is part of a phenomenon that we are seeing globally, with rising inflation concerns due to rising inflation prices,” said Shane Oliver, chief economist at AMP Capital in Sydney.

“Hopefully maybe this will harden the Fed,” he said, although he personally doesn’t think the Fed will be in a hurry to hike.

The five-year yield in Asia rose nearly 4 bps to 1.095%, the highest since the end of February 2020, and the benchmark 10-year yield touched a four-month high of 1.6310%.

The 10-year yield has now climbed nearly 30 basis points in three weeks, even with softer-than-expected US labor data last week insufficient to sell or shake the market. The rate is definitely about to start increasing. Year.

Bonds are also under pressure globally, with 10-year bond yields rising by 20 bps in three weeks, 10-year Australian government bonds yielding around 50 bps over the same period and even That’s a 5.5 bps increase in 10-year Japanese yields. (Reporting by Tom Westbrook; Editing by Simon Cameron-Moore)

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