The 30-year yield stayed near a five-month high and last traded 2.6 bps higher at 4.6624%
Weak China markets dragged broader Asian shares lower on Thursday, while longer-dated U.S. bond yields gained alongside the dollar as investors assessed the monetary policy and inflation outlook in the U.S.
Bitcoin steadied above $90,000 after having surpassed that level in the earlier session, boosted by Donald Trump’s return to the White House and the view that his administration will be a boon for crypto currencies.
The world’s biggest crypto currency last traded 1.7% higher at $90,151, having already surged more than 30% on a two-week rolling basis.
In the wider market, traders responded to a U.S. inflation figure that was in line with expectations by ramping up bets of a Fed rate cut next month, though the monetary policy outlook for 2025 and beyond was clouded by Trump’s return to office.
Trump’s plan for lower taxes and higher tariffs are expected to stoke inflation and reduce the Fed’s scope to lower interest rates.
Edison Research also projected on Wednesday that the Republican Party will control both houses of Congress when the President-elect takes office in January, which would enable him to pursue his agenda largely unhindered.
That uncertainty was reflected in longer-dated U.S. bond yields, which pushed higher in Asia trade on Thursday.
The benchmark 10-year Treasury yield peaked at 4.483%, as per LSEG data, its highest since July 1.
The 30-year yield stayed near a five-month high and last traded 2.6 bps higher at 4.6624%.
Speculations about what Trump might do on the domestic policy and trade front are unlikely to be featured in the Fed’s December projections. This will change as the first policies are being rolled out, according to Boris Kovacevic, global macro strategist at Convera.
The actual impact of tariff increases and tax cuts will mostly be felt after 2025 as both the implementation and transmission to the real economy take time. This will give the Fed some time to change its reaction function accordingly.
On the shorter end of the curve, the two-year yield, which typically reflects near-term rate expectations, declined marginally to 4.3088%, based on LSEG data.
