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  • Writer's pictureanalysiswatch

Title: U.S. yields at 3-1/2 year highs on rate hike unease

May 09, 2022 07:36AM ET

By: AnalaysisWatch

US government bond yields rose for a third straight day on Monday, with the 10-year bond yield rising further above 3% to a 3.5-year high, as expectations of higher interest rates rattled investors.

US Treasury yields have doubled in two months as the Federal Reserve has taken a tightening stance on inflation after raising rates by 50 basis points last week.

And the yield curve steepened even more when it was announced on Friday that US job growth increased more than expected in April, reinforcing the view that the Fed is looking to tighten further.

Money markets expect interest rates to rise by up to 200 basis points by the end of the year.

On Monday, yields on 10-year US Treasury bonds climbed to their highest level since November 2018, at 3.2%. Most recently, they raised 6 basis points in one day.

The rise in longer-term bond yields outpaced the short end of the curve, pushing the spread between two-year and 10-year bonds to almost 50 basis points, the highest level in almost three months.

Yields on inflation-linked US Treasuries hit new multi-year highs, with five-year yields rising to the highest level since March 2020.

The yield on 10-year US Treasury inflation-linked bonds recently rose 6 basis points to 0.35%, also the highest in two years.

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