Investing.com – The yield on the United States 10-Year U.S. Treasury note topped 1.67% early Wednesday to hit a 13-month high, ahead of a key press briefing from Federal Reserve Chairman Jerome Powell.
The move reflects renewed nervousness on the part of markets about the future direction of inflation, at a time when the U.S. economy appears to be starting a vigorous recovery from the pandemic. The Fed’s current guidance suggests that it will not hike interest rates before 2024, allowing plenty of time for inflationary pressures to build up.
Powell’s statements in recent weeks have asserted that there is no real danger of runaway inflation as long as the U.S. hasn’t replaced the 10 million jobs that it lost last year. Treasury Secretary Janet Yellen, who is overseeing a record borrowing program to fund the administration’s $1.9 trillion stimulus package, argued at the weekend that the risk of inflation is “small” and “manageable”.
Even so, markets are now pricing an earlier tightening of Fed policy The 5-year note yield, which is more sensitive to expectations of short-term interest rate movements, has risen to 0.85% from around 0.35% at the start of the year.
The last time the 10-year was this high was in February 2020 when the world was still trying to understand what Covid-19 was all about.
The latest relief package comes after several trillions were pumped into the economy last year by the Fed and the Trump administration to limit the damage to the economy from Covid-19.
Source: Economy - investing.com
