Treasury yields edge lower New Year’s Eve, with 10-year near 1.5% in largest yearly rise since 2013

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US Treasury yields remained lower in the year’s final session, finding some support amid renewed panic about Omicron’s rapid spread, even though evidence suggests the latest strain of the virus that causes COVID-19 is mild. produces symptoms.

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The bond market closed an hour earlier on Friday to mark the New Year’s Day holiday, but other markets follow regular trading hours.

What is the produce doing?
What is driving the market?
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Bond yields fell on Friday, the last trading day of the year, as the market took a hit due to the New Year holiday.

Yields rose during 2021 as investors gauge the stability and intensity of inflation, triggered by COVID-induced supply-chain constraints and labor shortages, coupled with increased demand from fiscal stimulus is combined.

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At least one analyst is predicting that the yield on the benchmark 10-year Treasury will climb only marginally in 2022, ending the year in the 1.75% to 2% range, according to Lawrence Gillum, fixed-income strategist at LPL Financial. . ,

However, predicting yields over the past several years has proven to be a folly and in 2022 it is unclear how the Federal Reserve will combat inflation.

ReadingThe 10-year Treasury yield of 2% or more has been elusive. Here the banks are making it their 2022 call.

At its mid-December meeting, the Fed described what it described as a hawkish pivot, intensifying the wind of its monthly bond purchases, with the goal of ending the program by March. The market estimated three benchmark interest rate hikes. in 2022. The next Fed meeting will be on January 25-26.

On Friday, concerns about the virus were reminding investors of the challenges facing Wall Street next year. COVID infections are increasing in some parts of the world. The seven-day average of new cases in the US rose to 344,543 on Thursday from 301,477 on Wednesday.

There was no US economic data on Friday, but next week market participants will look to a manufacturing report from the Supply Management Institute and minutes of the Fed’s December meeting.

What are strategists saying

“Looking to 2022, yields remain front and center. We expect the early part of the new year to see 10-year yields free of the tight range they’re stuck in and we’re still in the camp that thinks they breakout more,” said Jeff DeGraff Wrote, analyst at Renaissance Macro Research.

“With some new trading signals starting next week, it may take several trading days for the normal January trading machine to start rolling out,” Jim Vogel, interest rate strategist at FHN Financial, wrote in a Friday note. “Every data release for December was measured before the explosion of Omicron cases.”

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