US 2-year yields bid after Fed doubled the pace of tapering


  • Fed sends mixed signals around timings of lift-off with dots in contrast to Powell's presser.
  • US yields gyrate between 2-year bullish/10-year bearish.

The US Federal Reserve doubled the pace of tapering to $30bn per month, as was widely expected, which has a direct impact on the near-term US yields. 

The 2-year government bond yields rose from 0.65% to 0.66% while the 10-year government bond yields rose from 1.42% to 1.46%. However, we have seen a setback in the 10's during Asia which has risen to as far as 1.4820% but are now trading at 1.46% and lower by 0.14% on the day so far. 

While the ‘dot plot’ projected three 25bp rate hikes in 2022, compared to one previously and two expected by most, this is by no means a road map that is set in stone and the variables that can affect the path of tightening is weighing.

Fed's chairman, Jerome Powell, emphasised that all depends on not just the covid variant but economic data as well, hinting that there was no certainty of lift-off in 2022. This derailed the US dollar and sent US stocks higher.  The S&P 500 rose 1.6% to 4,709.85, the Nasdaq Composite was up 2.2% to 15,565.58 and the Dow Jones Industrial Average advanced 1.1% to 35,927.43.

US02Y daily chart

Nevertheless, the technical outlook for US 2-year yields remains firmly bid from a daily perspective while above 0.62%:

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD retreats further from the multi-week top, eyes mid-0.6200s

AUD/USD retreats further from the multi-week top, eyes mid-0.6200s

AUD/USD attracts sellers for the second straight day amid trade war fears, fueled by US President Donald Trump's threat to impose steep tariffs on Colombia. Furthermore, RBA rate cut bets, China's economic woes and a modest USD strength drags spot prices away from over a one-month peak touched last Friday.

AUD/USD News
USD/JPY retakes 155.00 mark; upside potential seems limited

USD/JPY retakes 155.00 mark; upside potential seems limited

USD/JPY builds on the overnight bounce from a six-week low and climbs back above the 155.00 psychological mark on Tuesday following the release of service-sector inflation data from Japan. Moreover, the uncertainty over US President Donald Trump's trade policies and a modest USD strength lend support. 

USD/JPY News
Gold price bulls seem reluctant amid rising US bond yields, modest USD strength

Gold price bulls seem reluctant amid rising US bond yields, modest USD strength

Gold price struggles to attract any meaningful buyers on Tuesday and remains close to a near one-week low set the previous day. Rebounding US bond yields support the USD and act as a headwind for the non-yielding yellow metal. That said, Fed rate cut bets and a weaker risk tone should help limit the downside for the safe-haven XAU/USD.

Gold News
Why China's DeepSeek is causing Bitcoin and crypto market to plunge

Why China's DeepSeek is causing Bitcoin and crypto market to plunge

Bitcoin slipped below $100,000 on Monday as China-based artificial intelligence model DeepSeek began gaining popularity across the US market, overtaking OpenAI's ChatGPT. DeepSeek's impact also led to rapid declines in the stock market with NASDAQ, diving more than 3%.

Read more
What is DeepSeek, and why is it important?

What is DeepSeek, and why is it important?

Several Chinese companies pivoted into making their various AI model offerings open source last week, sending shockwaves through the tech sector. Chinese tech startups look set to disrupt the AI space, which has, until recently, been almost singularly dominated by high-priced US tech giants and soaring valuations.

Read more
Trusted Broker Reviews for Smarter Trading

Trusted Broker Reviews for Smarter Trading

VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures