Traders halt liquidation of US Treasuries after consumer confidence data

FILE PHOTO: The US Treasury Building in Washington DC, United States, on September 29, 2008. REUTERS / Jim Bourg

By Ross Kerber and Dhara Ranasinghe

NEW YORK / LONDON, Nov 12 (Reuters) – Sales in the US debt market paused on Friday after data showed consumer confidence slumped to a 10-year low on inflation concerns, while traders were trying to gauge the pace of future Fed interest rate hikes.

* The five-year bond yield rose 2.3 basis points to 1.2357%, after reaching 1.263% earlier, its highest level since February 2020, accumulating a rise of 5 basis points compared to its price of the Wednesday, the last trading day before a Thursday holiday.

* However, returns fell again as the University of Michigan Consumer Confidence Index showed little faith that central bank officials are taking sufficient action to control inflation.

* The moves left key parts of the yield curve near record lows. For example, the spread between the five-year and 30-year bonds stood at 72 basis points, two points above its close on Wednesday. It had hit a low of 62 basis points early on Friday, its lowest level since March 2020.

* Kim Rupert, a senior economist at Action Economics, said the trading showed investors struggling to forecast whether the Federal Reserve will accelerate its pace of expected rate hikes amid data from the University of Michigan and other signs of price increases.

* Economic data on Wednesday showed the biggest annual acceleration in inflation in 31 years.

* The return on benchmark 10-year bonds rose 2.4 basis points to 1.5818% on Friday. The 10-year equilibrium rate remained close to 2.71%, the highest level since May 2006.

Five-year bond yields ready for biggest weekly rise in 2 years (English)

Asset performance in the year


(Reporting by Ross Kerber and Dhara Ranasinghe. Edited in Spanish by Marion Giraldo and Manuel Farías)

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