Precise Investors

Tuesday, December 6, 2022

U.s. treasury yields hold near multiyear highs

treasury yields

The benchmark U.S. 10-year yield edged up as high as 4.276%, its highest level since June 2008, having risen nearly 10 basis points overnight

U.S. Treasury yields held near multiyear highs on Friday, with markets seeing no let-up in tightening from the Federal Reserve, causing shares to slip and the dollar to stay strong, particularly against the embattled Japanese yen.

The benchmark U.S. 10-year yield edged up as high as 4.276%, its highest level since June 2008, having risen nearly 10 basis points overnight.

This dragged on shares, with Europe’s STOXX index falling 1.5%, U.S. S&P500 futures sliding 0.6% and MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.88%, languishing near the two-and-a-half year intraday low it touched the day before.

It’s all so tenuous. The problem is the macro environment still remains difficult, said Shane Oliver, chief economist at AMP Capital, adding that the market is in a tug of war between investors who see opportunities and those who are focused on the difficult backdrop.

Global markets have been extremely volatile as investors worry that hefty rate hikes will push major economies into recessions before inflation is tamed, while the resulting stronger dollar could wreak havoc in emerging markets.

Philadelphia Federal Reserve President Patrick Harker on Thursday suggested the central bank will “keep raising rates for a while,” while U.S. economic data showed persistent labour market tightness.

This rate environment continues to (cast) doubts (on) the sustainability of any rally in equities, and chances that the dollar will receive more safe-haven flows are elevated, said Francesco Pesole foreign exchange strategist at ING in a note to clients.

Furthermore, third-quarter corporate earnings have offered little help to equities. On Friday Adidas shares dropped 8% as the German sporting goods maker cut its full-year outlook, citing weaker demand.

European retail shares were down 3% also hurt by Friday data showing British shoppers reined in their spending more sharply than expected in September.

Higher U.S. yields were also being felt in currency markets, where the yen weakened to a fresh 32 year low of 150.64 per dollar and was heading for its 13th straight session of declines.

The Japanese currency is particularly sensitive to moves in U.S. yields as the Bank of Japan has a policy of keeping benchmark Japanese government bond yields near zero.

Fresh threats of intervention to support the yen made by Japanese policymakers have kept investors on alert, although there has been no official announcement of further action since the Ministry of Finance’s dollar-selling, yen-buying intervention last month.


The articles are for information purposes only and Precise Investors shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Precise Investors does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply