Treasury yields plummet to start the week
US Treasury yields tumbled on Monday morning as investors digest signals that more aggressive interest rate hikes are on the horizon.
The yield on the benchmark 10-year Treasury fell 8 basis points at 3:45 a.m. ET. The yield on 30-year Treasury bonds fell 5 basis points. Yields move inversely to prices and 1 basis point equals 0.01%.
Treasury yields fell sharply on Monday morning, after surging late last week following comments from Federal Reserve Chairman Jerome Powell.
Powell said on Thursday that a 50 basis point interest rate hike was “on the table” for the Fed’s monetary policy meeting in May.
The 5-year Treasury yield then rose above 3% on Friday, exceeding the interest rate on 30-year government bonds. This is also known as the “yield curve inversion” and indicates a lack of investor confidence in the economy as they sell short-term debt in favor of bonds. long-term.
The 5-year yield slipped 10 basis points to 2.8486% on Monday morning.
No release of major economic data is scheduled for Monday. This week, investors are likely to focus on the March Personal Consumption Expenditures Price Index as a key gauge of inflation, which is due out Friday morning.
Julian Howard, head of multi-asset solutions at GAM, told CNBC’s “Squawk Box Europe” on Monday that he believed talk of a 75 basis point interest rate hike by some policymakers, in an attempt to to control inflation, was “totally the wrong policy and will actually hurt the economy.”
He pointed out that the so-called “Misery Index”, which looks at unemployment and inflation, was currently at “recessionary levels”.
“Do we really want a recession to beat inflation? I think that’s almost a policy mistake,” Howard said.
Investors continue to monitor developments in Ukraine as Russia’s invasion of the country entered its third month on Sunday. The conflict that has killed thousands and led to Europe’s worst refugee crisis since World War II.
The war will only end if Russian troops completely withdraw from the country, Ukrainian Prime Minister Denys Shmyhal has said.
— CNBC.com staff contributed to this market report.