US Treasury yields fell Monday morning as investors digested signs that more aggressive rate hikes were on the horizon.
The yield on the benchmark 10-year Treasury note fell 8 basis points at 3:45 am ET. The 30-year government bond yield fell 5 basis points. Yields move inversely with prices and 1 basis point equals 0.01%.
Treasury yields fell sharply Monday morning after rising sharply late last week on comments from Federal Reserve Chair Jerome Powell.
Powell said Thursday that a 50 basis point rate hike is “on the table” for the Fed’s May policy meeting.
The 5-year Treasury yield then surpassed 3% on Friday, moving above the 30-year Treasury yield. This is also known as the “yield curve inversion” and indicates a lack of investor confidence in the economy as they sell shorter dated debt in favor of longer dated bonds.
The 5-year yield fell 10 basis points to 2.8486% on Monday morning.
There are no major economic data releases scheduled for Monday. Investors’ focus this week is likely to be the March PPI price index, a key measure of inflation, which is expected to be released on Friday morning.
Julian Howard, head of multi-asset solutions at GAM, told CNBC’s Squawk Box Europe on Monday that he believes the talk by some policymakers of raising interest rates by 75 basis points to control inflation is “totally wrong.” politics and will actually hurt the economy.”
He pointed out that the so-called “misery index”, which looks at unemployment and inflation, is currently at “recessionary levels”.
“Do we really want a recession to beat inflation? I think that almost borders on a political error,” Howard said.
Investors continue to monitor developments in Ukraine as Russia’s invasion of the country entered its third month on Sunday. The conflict that has killed thousands and led to the worst refugee crisis Europe has seen since World War II.
The war will only end if Russian troops completely withdraw from the country, said Ukrainian Prime Minister Denys Shmyhal.
— CNBC.com employees contributed to this market report.
https://www.cnbc.com/2022/04/25/us-bonds-treasury-yields-slump-to-start-the-week.html Treasury yields plunge at start of week