Treasury yields rise as investors assess interest rate outlook ahead of key inflation data
U.S. Treasury yields climbed on Tuesday as investors weighed the outlook for Federal Reserve interest rate hikes after the fallout from Silicon Valley Bank’s collapse and awaited fresh inflation data.
At 5:06 a.m. ET, the yield on the 10-year Treasury was up by almost seven basis points to 3.5827%. The 2-year Treasury was last at 4.1857% after climbing over 15 basis points. It had declined by close to 59 basis points on Monday, notching the biggest three-day drop since the fallout from the October 1987 stock market crash.
Yields and prices move in opposite directions and one basis point equals 0.01%.
Shockwaves linked to Silicon Valley Bank’s failure continued to reverberate through markets. Bond yields had plummeted as prices rose following the bank’s collapse, which sparked fears of broader issues across the banking sector. Many investors therefore sought safety in traditionally safer assets like government bonds.
Uncertainty about future Fed monetary policy, especially regarding interest rates, was also spurred on by the aftermath of SVB’s collapse. Investors had been expecting the central bank to pick up the pace of rate hikes again and announce a 50 basis point increase at its upcoming meeting on March 21 and 22.
Now, however, some economists believe that rate hikes could be paused altogether or that the Fed might stick to lower rate increases and announce another 2 basis point hike like it had done at its last meeting.
This report’s information was first seen on CNBC; to read more, click this link.
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