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Short-dated US bond yields rise as central bank meetings draw near

Yields on short-term government bonds rose to their highest levels since March 2020 on Wednesday as additional signs of stubborn high inflation prompted investors to bet on global rate hikes.

The latest wave of sales in the short-term portion of the bond market, which is particularly sensitive to monetary policy expectations, came after that. Data showed Australia’s core inflation index rose to 2.1% annually in the June-September quarter, pushing it into the central bank’s target range for the first time since 2015.

The market is betting that the Reserve Bank of Australia will raise interest rates from its current lows next summer, even though the central bank has repeatedly insisted that it does not need to raise borrowing costs until 2024. Three-year bond yields have risen to 0.95. Wednesday’s percentage increased from 0.76 percent the day before.

“As yields continue to rise, [the RBA] Commerzbank analyst Antie Prefke said: “Markets may increasingly assume that due to economic and inflationary developments, the RBA will have to rethink its expanding monetary policy.”

Selling has flowed into the major global benchmark, US Treasuries, in the continuation of recent trends driven by the expectation that monetary policy makers will be forced to raise interest rates to cope with higher price increases. Long-term debt is protected from the worst selling, and some investors are betting that tightening monetary policy will slow economic growth over the next few years.

Inflationary pressure on the hot expectations of the Federal Reserve Board next week put US Treasury yields below 0.5% on Wednesday. Central banks have already suggested that the $ 120 billion / month pandemic bond purchase program could soon begin to shrink.

The European Central Bank will meet this Thursday, with RBA interest rate decisions scheduled for next Tuesday, the Fed next Wednesday, and the Bank of England the next day.

In the stock market, European equities began trading almost flat as investors considered a surge in earnings reports delivered across the Atlantic. The Stoxx 600 fell 0.1% while the London FTSE 100 was stable. This preceded the announcement of the UK budget at lunchtime, when Prime Minister Rishi Sunak outlined the country’s financial situation and future spending plans.

This move has continued since the fall in Asian stocks. Hong Kong’s Hang Seng Index fell 1.7% in mid-afternoon trading. This has fallen by real estate companies that have faced close scrutiny in recent months due to the liquidity crisis of the evergrande group, a debt-bearing developer, as Beijing cracks down on the real estate sector.

NS Excellent S & P500 Index in the United States It hit another record on Tuesday, closing about 0.2%. S & P has risen 22% since early January. On Tuesday, it was backed by the good performance of UPS and General Electric. After the closing bell Google’s parent alphabet and numbers from fellow high-tech giant Microsoft It exceeded the expectations of analysts.

Wednesday’s futures market suggested that S & P would rise 0.2% and the technology-focused Nasdaq 100 index would rise 0.2%.

What to see in today’s market

England: Prime Minister Rishi Sunak announces annual budget speech and spending review. Government officials have already confirmed a national minimum wage increase, and Snack will announce the end of the public sector’s “pause of wages.” The UK Budget Responsibility Department also publishes its economic and financial outlook, and the Bank of England publishes capital issuance statistics.

Economic data: France publishes consumer confidence and inflation data, and Germany publishes GfK’s monthly consumer confidence survey. Data on economic activity in September show European consumers bold about high Covid-19 vaccination rates, despite concerns over rising energy prices, supply chain disruptions and possible economic slowdowns in China It suggests what I felt.

Short-dated US bond yields rise as central bank meetings draw near Source link Short-dated US bond yields rise as central bank meetings draw near

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