US 10-year Treasury yields poke 11-week top after the biggest jump since February

  • US 10-year Treasury yields await fresh clues to refresh multi-day top, stays firmer.
  • Hawkish Fed, Evergrande chatters underpin US bond selling.
  • Risk catalysts, second-tier eyed for fresh impulse, likely dull day ahead.

US 10-year Treasury yields stay on the front foot around 1.43% after rising the most in seven months the previous day.

The risk barometer’s prior rally, of around 10 basis points (bps), could be linked to the US Federal Reserve’s (Fed) hawkish hints while the latest moves could be linked to the headlines from China, concerning Evergrande. Also favoring the bond sellers could be the chatters over US stimulus and vaccine.

The Fed left benchmark rates unchanged near 0.25% at the latest meeting but signaled rate hikes and tapering more seriously. Furthermore, the Bank of England (BOE) also followed the Fed, actually more rigorously by signaling that the rate hike precedes tapering. On the same line wad Norwegian central bank that hiked the benchmark rate.

Hence, the leading central banks are up for consolidating their easy money options and hence push the investors off Treasuries.

On the other hand, fading fears that China’s struggled real-estate firm Evergrande is a serious threat to the economy also played a key role in the US bond yield jump. The firm got restructuring plans and showed readiness to pay a scheduled coupon while also gained government support to lift the sentiment.

It should be observed that softer prints of the US preliminary PMI readings for September and higher Weekly Jobless Claims failed to provide any major support to the bond prices, which in turn propelled the yields.

That being said, the firmer yields pose a serious challenge to the gold prices even as firmer stock futures challenge the precious metal bears at the latest.

Read: Gold Price Forecast: XAU/USD braces for three-week downtrend towards $1,717 on firmer Treasury yields

Looking forward, China’s Evergrande is up for paying the coupons at today’s deadline and hence any news surrounding the same may entertain traders ahead of the US New Home Sales for August, expected 0.7M versus 0.708M prior. It’s worth noting that a passage of the key data and events hints at a dull end to the volatile week.

Read: Forex Today: Risk appetite takes its toll on the greenback

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