US bond markets are in turmoil as geopolitical risks continue amid the Russia-Ukraine war and the Fed adopts a hawkish monetary policy stance amid inflationary pressure.
Inflation has been rising since May 2021 and the Fed’s stance has continued to cause outflows from the bond market.
With US inflation breaking a 41-year record, increasing selling pressure in the bond markets has increased yields to their highest levels since 2018.
Long-term bond rates, such as 10 and 30 years, are leading the rise in bond markets. The 10-year US bond yield has reached its highest since December 2018 with 2.83 percent.
Support from monetary policy is declining, stoking recession risks, while the selling trend in the bond markets has deepened.
In March, the 10-year bond yield fell to 2.7% on hopes that inflation had peaked and after the increase in the core consumer price index (CPI), which does not include volatile energy and food prices, was below expectations.
While the US 30-year bond yield rose to the level of 2.85%, it was withdrawn to 2.79% after the March inflation data were announced.
On Tuesday, annual consumer inflation data were released, showing a rise of 8.5% in March — the largest 12-month increase since December 1981.
The CPI, which measures changes in the prices of goods and services from a consumer’s perspective, was higher than the market estimate of 8.4% after it rose 7.9% in February.
The five-year bond interest rate in the country decreased from 2.84% to 2.67%, the two-year bond interest remained at 2.41% after seeing 2.59%.
Source: Anadolu Agency