US 10-Year Treasury Yield Nudges 3%
The key US 10 year bond yield gave 3% a nudge on Monday, worrying investors and traders alike. That left it within a whisker of the level last seen four years ago.
At the same time the yield on the 2 year treasury bond got to with a sniff of 2.50%, which was last hit back in 2008 as yield were plunging in the middle of the GFC.
The reason were the usual cast of suspects - fears about higher inflation, rising wages and a flood of new bond issuance to pay for the Trump budget deficits, plus a belief the Fed will tighten faster than expected.
the question for investors is once the 3% level if breached, will that force equity investors to look again at their holdings and switch into higher yielding bonds?
The 10 year yield rose as high as 2.995% ended the session around 2.975%. The yield on the two-year Treasury note was up almost 2bp at 2.48%.
Donald Trump’s election with the promise of economic stimulus has seen bond yields move higher, sending the 10-year yield as high as 2.62% in March 2017 and within sight of the 3% level in February this year as the passage of unfunded tax cuts late last year helped stir inflationary fears.
The yield on Australian 10 year bonds rose 6 basis points (bps) yesterday to 2.86%.
The Aussie dollar was trading around 76 US cents this morning, down three quarters of a cent from Friday’s close.
The Aussie is down 4.8 cents against the greenback since the peak of 80.94 US cents on January 29.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.