U.S. short-term interest rates surged after Federal Reserve Chairman Jerome Powell said he would raise interest rates higher than previously thought if necessary.
Fed Chair Powell Ready to Hike Faster if Needed, Senate Testimony
In the swap market, the range of interest rate hikes expected at the Federal Open Market Committee (FOMC) meeting in March has changed. 0.5 points is considered slightly more likely than 0.25 points. The peak interest rate priced in by the market also rose to just under 5.6%.
While U.S. Treasury yields have risen for all maturities, the notable 2-year and 10-year yields have widened, reaching 100 basis points (bp, 1bp = 0.01%) for the first time in this cycle. . Inverted yields on 2-year and 30-year bonds hit a record high of 108 basis points.
| government bond | Latest price | YoY change (bp) | Rate of change |
|---|---|---|---|
| US 30-year bond yield | 3.88% | -1.7 | -0.42% |
| US 10-Year Treasury Yield | 3.96% | 0.4 | 0.10% |
| US 2-Year Treasury Yield | 4.96% | 7.6 | 1.56% |
| US Eastern Time | 12:03 |
Expectations for a European Central Bank (ECB) rate hike also rose, with money markets pricing in a total rate hike of 1.5 percentage points by July for the first time.
In the foreign exchange market, the dollar climbed to the high 136 yen range, rising 0.7% to 136.90 yen. The euro fell by 1% to 1 euro = 1.0574 dollars at one point.
Original title:Traders See Half-Point Fed Hike More Likely After Powell Speech、Traders Price In 150bps of ECB Rate Hikes by July After Powell、Dollar Rises on Release of Fed Chair Powell’s Prepared Comments（抜粋）
(In the third paragraph, I add a statement about the expansion of the inverted yield of US Treasuries.)