US 10-year Treasury yields refresh 15-week top with eyes on Fed tapering, US debt limit and China

US 10-year Treasury yields print five-day uptrend, sidelined of late.
Fed’s Bulls reiterate support for tapering, Fed Chair Powell backed the move yesterday.
US policymakers jostle to avoid debt ceiling expiry, President Biden cancels Chicago visit.
US diplomatically reaches China to cut imports from Iran, Evergrande approaches coupon payment date.

Anil Panchal FXStreet

US 10-year Treasury yields remain on the front foot for the fifth consecutive day, around 1.55% amid Wednesday’s Asian session.

The risk barometer jumped to the highest since mid-June the previous day on the market’s rush to risk safety.

The risk aversion wave took clues from the mounting concerns over the US Federal Reserve’s (Fed) imminent tapering of bond purchases, as well as fears concerning China and Evergrande. Also weighing on the sentiment were downbeat data from China and the US.

Recently, St. Louis Federal Reserve President James Bullard said that he sees Fed going ahead with starting taper in November. On Tuesday, Fed Chairman Jerome Powell narrated inflation and employment stories to justify the central bank’s uttering of the word ‘taper’ during his testimony to Congress.

Also contributing to the risk-off mood were the headlines concerning China and Evergrande. While the People’s Bank of China (PBOC) tried to defend the money flow with heavy liquidity injection, the World Bank and the Asian Development Bank (ADB) cited worries over the dragon nation’s economic growth by citing power cuts in addition to Evergrande problems.

It’s worth noting that Reuters recently quoted the US and European Union (EU) diplomats while saying, “The United States has reached out to China diplomatically about reducing its purchases of Iranian crude oil as Washington seeks to persuade Tehran to resume talks about reviving the 2015 nuclear deal.”

Additionally, US stimulus and debt limit news also exerted downside pressure on the market sentiment. Recently, US President Joe Biden’s canceled visit to Chicago to lead negotiations over his legislative agenda after the Democrats got defeated at the Senate to extend the debt ceiling and US Treasury Secretary Janet Yellen warned of empty pockets by October 18.

Looking forward, Fedspeak and the second-tier US housing numbers may entertain traders but headlines concerning stimulus, debt limits and China will be the key to follow for fresh impulse.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.