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Treasury yields rise after Federal Reserve forecasts soar due to inflation

After the Federal Reserve Board issued its policy statement and economic forecasts, US Treasury yields rose Wednesday, showing an increase in inflation forecasts.

Benchmark yield 10-year government bond In the afternoon trading, it rose more than 7 basis points to 1.575%, and short-term bond yields also rose.Yield 30-year government bond There was almost no change at 2.193%. Yield is inversely proportional to price. Yields fell the day before the Fed’s decision was announced.

Central Bank Stabilized the target interest rate at almost zero, But it predicted high inflation earlier.

The Federal Reserve Board has changed its annual headline inflation forecast to 3.4%. This is well above the March forecast. The so-called dot plot showed that the central bank expects a rate hike in 2023 a year earlier than previously estimated.

The central bank reiterated in its policy statement that it expected price increases to be “temporary.”

The Fed wasn’t expected to take any action at this conference Economists expected a central bank To show that we are starting to think about tapering bond purchases.

The central bank did not announce plans to delay these purchases, but Fed Chair Jerome Powell said at a press conference that Fed officials were seeing progress in the recovery and how it relates to the program. Said we talked about.

“Although reaching the standard of’substantial further progress’is still a long way off, participants are hoping that progress will continue,” Powell said. “At upcoming meetings, the Commission will continue to assess the progress of the economy towards our goals. As we said, we will prior to announcing the decision to make changes to our purchases. I’ll announce it.”

Yields temporarily fell below highs after warning at Powell’s press conference that a gradual decline in asset purchases was not imminent and that the Fed’s 2023 rate hike forecast needed to be caught in “big salt.” ..

Powell said it was time to abolish the phrase “speak about talking” about changing asset purchases. He had previously used a version of that statement to show that the Fed’s short-term agenda was flat.

Willemselus, chief investment officer at HSBC’s Private Banking and Wealth Management, said the statements and forecasts were not a big surprise, but they represented a change in tone.

“This isn’t a big surprise, but it’s a bit more hawkish than many economists expected, and the median dot shows two rate hikes by 2023. Before the meeting, the market was already in 2022. Was pricing the opportunity to raise rates. Hiking in 2023. ” “This should limit the impact of today’s news, as the market has already begun to predict future changes in the Fed’s interest rate direction, but the immediate market reaction is a modest rise in Treasury yields, As a result, the stock market will decline slightly. The tone of the hawks. ”

Mr. Sels added that the main uncertainty in the market is related to the time when the Fed begins to taper off bond purchases.

Ministry of Commerce May data released In May, building permits for 16.81 million units decreased by 3.0%, and housing starts increased by 3.6% to a seasonally adjusted annual rate of 15.72 million units.

The Ministry of Labor reported on Wednesday that import prices rose 1.1% in May after rising 0.8% in April. Export prices rose 1.1% in April and then 2.2% in May.

An auction took place on Wednesday, winning $ 35 billion of the 119-day Treasury bill.

— — CNBC’s Patti Domm, Pippa Stevens and Tanaya Macchel contributed to this market report.

Treasury yields rise after Federal Reserve forecasts soar due to inflation

Source link Treasury yields rise after Federal Reserve forecasts soar due to inflation

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