In anticipation of Federal Reserve interest rate hikes , U.S. bond yields have risen further. On January 19, the U.S. 10-year Treasury bond yield stood at 1.9% for the first time since before January 2020.
The 10-year bond is the most active among all maturities of U.S. bonds. Therefore, the 10-year U.S. bond yield is widely recognized as the "risk-free rate of return", which determines the lower limit of the return rate of various assets and is regarded as a global asset. Pricing the "anchor" of . It reflects the term premium of funds in the market, demand for safe assets and expectations for future inflation.
The surge in the "anchor" of U.S. debt will put pressure on the performance of global financial assets. This is also an important logic behind the weak overall market trend of global stock markets, including US stocks , European stocks, Japan, South Korea, Hong Kong, A shares , since the beginning of the year.
The three major U.S. stock indexes fell collectively overnight on January 18. Among them, the Nasdaq index , with technology stocks as the main component, has fallen by more than 7% this year.
Regarding the current market, Bank of America said that the Federal Reserve is currently in urgent need of rapid interest rate hikes to deal with inflation . The relatively hawkish attitude of raising interest rates may be implemented throughout this year, which makes risk assets represented by technology stocks fall into turmoil.
Investors are now increasingly worried that rising inflation in the United States will prompt the Federal Reserve to tighten policy faster than expected, and even speculation about a interest rate hike of 250 basis points in March has emerged. Bill Ackman, the hedge fund giant in the United States and CEO of Pershing Square Capital Management, called on the Federal Reserve to lose control of inflation and that it can restore its credibility through an unexpected move to raise interest rates by 50 basis points, which will show its determination to deal with inflation. .
At a time when bond yields are generally rising around the world, even German government bond yields, known for their ultra-low interest rates, are rising due to the possibility of the European Central Bank tightening policy. Germany's 10-year benchmark government bond has had negative yields for nearly three years. But as global government bond prices fell, the German 10-year government bond yield turned positive on January 19 for the first time since 2019.
Germany’s benchmark government bond yield has been below zero in recent years, and this turn to positive value is symbolic. The 10-year Bund yield has been in negative territory since the beginning of 2019 and reached as low as -0.91% during the peak of the coronavirus panic in March 2020.
Judging from the current increase, the 10-year U.S. bond is likely to rise by more than 2%, but some institutions say that recent expectations are too much. Mamoru Shimod, chief strategist at Resona Asset Management, believes the Fed is unlikely to allow U.S. Treasury yields to continue rising sharply. Investors are a bit anxious at the moment, with trading driven by fear, as the market speculates that the Federal Reserve may raise interest rates by 50 basis points in March instead of 25 basis points. But if yields continue to rise, the Fed may speak to reassure markets, using subtle language to suggest yields have gone too far. I don't think the 10-year Treasury yield will continue to rise above 2%. This is something the Fed will not tolerate.
This article comes from Wind information
