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Unveiling the Surge in US Treasury Bond Yields

By Samir Al Khoury

US Treasury bond yields across different terms have experienced notable increases for four consecutive sessions. Presently, the two-year bond yield stands at 4.649%, marking its peak since March 1, 2024, while the ten-year bond yield sits at 4.210%, reaching its highest point since March 5, 2024.

 

 

The two-year bond yield is considered very sensitive to federal monetary policy, and there is an important factor that gave positive momentum to this short-term yield, which is the superiority of the headline and core consumer price indexes on an annual basis (which excludes food and energy) over analysts’ expectations, as they each recorded 3.2% and 3.8% respectively. The services sector remains the strongest contributor to these increases. There is also an indicator that the Fed is focusing on, which is the core consumer price index, which excludes food, energy, and the cost of housing as well, and what is known as the Super Core CPI, which remains firmly at the level of 4.30% on an annual basis, and this indicates that the Fed may delay reducing interest rates during this year.

 

 

It is worth noting that the inversion in the yield curve still exists between two-year and ten-year bond yields at approximately negative 44 basis points, indicating the possibility of the United States of America entering a stage of economic recession or a smooth decline this year.

 

 

Today, analysts are closely awaiting the release of producer price indices, retail sales, and initial jobless claims in the United States of America at 16:30 UAE time, as it will have a direct impact on other financial markets, specifically bond markets.

 

 

Technically, the momentum appears to be positive for the two-year bond yield, according to the Relative Strength Index, which is currently recording approximately 57 points, and the biggest challenge is reaching the level of 4.759%, which is the highest level recorded this year, specifically on February 23, 2024.

 

 

 

 

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk

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