US Treasury yields drop to early 2021 levels during three-day downtrend

US 10-year Treasury yield drops to March 03 levels, 30-year T-bond yield revisits mid-February lows.
Slump in US Inflation expectations weighs on the bond yields.
Fed rate hike concerns also weigh on the risk barometer.

US Treasury bond yields remain pressured for the third consecutive day amid Monday’s Asian session. In doing so, the risk gauge tracks the US inflation expectations while also justifying the fears over the US Federal Reserve’s (Fed) hawkish mood, conveyed during the last week.

The US 10-year Treasury yield drops three basis points (bps) to 1.42%, the lowest since March 03 whereas the 30-year bond yield extends the previous two-day south-run to the mid-February lows surrounding 2.0%. On the same line, the US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, drop to the lowest since early March levels, around 2.24% by the press time.

Behind the moves could be the escalating chatters over the Fed’s rate hike and uncertainty concerning US President Joe Biden’s infrastructure relief package. Having heard the upward revision of the Fed’s economic forecasts and increasing support for two rate hikes in 2023, St. Louis Fed President James Bullard forecasts Core PCE at 3.0% for 2021 and 2.5% for 2022 while backing the tapering to start in next year.

Its’ worth noting that Reuters came out with the weekend update over infrastructure spending talks in the US Senate while signaling that the plan, “has been gaining support in the U.S. Senate, but disputes continued on Sunday over how it should be funded.” Elsewhere, fears of the Delta variant of the covid and Brexit also weigh on the market sentiment.

Amid these plays, Nikkei drops the most since early May to lead Asian markets towards the south whereas the S&P 500 Futures print 0.20% intraday losses by the press time.

Given the lack of major data/events, the risk appetite is likely to remain sour ahead of the US session when the Chicago Fed activity data and Fedspeak may offer fresh direction to the market.

Read: Post-Fed Markets: What to expect next?

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.