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US treasuries with a new bottom after FOMC
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Loading...The US government bond yield benchmark has reached its lowest level since a year after investors' worries about the economy have only grown since the Fed's yesterday's decision to leave interest rates unchanged.
10-year bonds - one of the most important and monitored debt instruments in the world, fell below 2.5 percent for the first time since the beginning of 2018, after which it climbed slightly to 2.51 percent.
This is another dramatic decline in profitability. Since November 2018, the index has fallen by more than 70 basis points when the worries about the world economy first began, which has begun a mass sale to the US markets.
The Federals had already indicated that they were considering a slightly more dovish approach earlier this year in order to reassure volatile markets and bond prices. On Wednesday, Fed representatives confirmed their position on monetary tightening, changing their original plan to raise interest rates this year from two to zero. This move by the Fed has again fueled fears in investors that economic conditions continue to worsen. These fears now reflect on government bond yields.
Some investors worry that the FED may even go farther and cut interest rates before the end of this year. The probability that investors have allowed for real felling this year has risen to 40%, from 25%.
The decline in government securities also dragged European bonds down. Bonds were already under pressure because of weak economic data and growing concerns about the UK's exit from the EU, and eight days left to Brexit.
Source: Financial Times
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