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.

Ross J Burland FXStreet

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%:

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD risks a deeper drop below 1.1750

EUR/USD keeps its vacillating mood in place as the the NA session drwas to a close on Tuesday, hovering below the 1.1800 hurdle amid acceptable gains in the US Dollar. In the meantime, market participants and the FX galaxy are expected to closely follow President Trump’s SOTU speech around 2AM GMT.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Ripple’s DeFi shift in focus: Navigating XRPL EVM sidechain growth, XRPFi migration and liquidity

Ripple (XRP) has continued to trade under pressure, extending its decline by approximately 63% from the record high of $3.66 in July. The remittance token is trading above support at $1.35, while its upside appears limited by key supply zones, starting with $1.40, at the time of writing on Tuesday.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.