Ahead of Fed Big Step... US 10-Year Treasury Yield Surpasses 3% for the First Time Since 2018

[Asia Economy New York=Special Correspondent Joselgina] The yield on the U.S. 10-year Treasury note surpassed 3% for the first time since December 2018 ahead of the May Federal Open Market Committee (FOMC) regular meeting.

According to economic media CNBC and others, in the New York bond market, the yield on the U.S. 10-year note was trading at 3.0%, up 0.115 percentage points from the previous close, as of 3:21 p.m. local time on the 2nd. On that day, the 10-year yield briefly reached 3.01% in the afternoon before slightly falling, fluctuating between 2.9% and 3.0%. This is the first time it has surpassed 3% since December 2018. At the end of last year, the 10-year yield was in the 1.5% range.

The 2-year yield, which is sensitive to monetary policy, is moving around 2.719%, the 5-year yield around 3.010%, and the 30-year yield around 3.060%.

This is a result of U.S. inflation reaching its highest level in over 40 years, prompting the central bank, the Federal Reserve (Fed), to signal interest rate hikes. Since the beginning of this year, as the Fed's tightening stance has intensified, prices of government bonds and corporate bonds have all declined. Bond prices move inversely to yields.

The Wall Street Journal (WSJ) reported, "The labor market is very tight and inflation has proceeded at the fastest pace in decades," adding, "The Fed's announcement of a series of sharp rate hikes triggered the rapid rise in yields." The Fed is widely expected to implement a so-called big step by raising the benchmark interest rate by 0.5 percentage points at once for the first time in 22 years at the May FOMC meeting on the 3rd and 4th, and to concretize quantitative tightening measures such as balance sheet reduction.

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