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No slack in gloom as Treasury yields continue to decline

 | Business News Today

No slack in gloom as Treasury yields continue to decline

| Business News Today | Fox News


10-year yields drop 10bp to less than 1.55% on the day

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Fears surrounding the new variant of COVID-19 are currently dominating markets and bonds are in high demand amid the flight to safety.

The fall in 10-year yields today undoes all the hard work by bond sellers this week and while the move is important, it comes with a few caveats.

First, thinner market conditions could exacerbate the decline in yields. Second, it challenges the simple narrative that central banks can easily consider rate hikes to counter rising inflationary pressures.

This latter issue may not be relevant if the new COVID-19 variant turns out to be a non-threat in the coming weeks, but we’ll see. As such, it offers a new element for traders to take into account in the ongoing inflation debate heading into the next year.

Elsewhere, even 2-year yields are down 8 basis points on the day and are expected to see their worst one-day decline since March of last year (at least in terms of basis points):

No slack in gloom as Treasury yields continue to decline

 | Business News Today

Slowing yields are also putting additional pressure on the yen pairs, with USD / JPY falling to new lows on the day, just below 114.50 for now.

No slack in gloom as Treasury yields continue to decline

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