Longer-dated US yields hit 16-year high on Fed rate outlook
US Treasury yields were higher on Monday, with the benchmark 10-year Treasury yield building on three straight weeks of gains on expectations the U.S. Federal Reserve will keep interest rates at higher levels for longer than initially anticipated.
Chicago Fed President Austan Goolsbee said on Monday that inflation remaining entrenched above the central bank's 2% target remains a bigger risk than tight Fed policy slowing the economy more than needed.
The yield on 10-year Treasury notes was up 9 basis points to 4.525% after climbing to 4.533%, its highest since October 2007.
«Essentially, the yield curve is going to start pricing in a recession, that is usually what happens when the yield curve steepens as much as it does,» said Tom di Galoma, co-head of global rates trading at BTIG in New York.
«You had the big inversion move, we've been inverted for a good 15 to 18 months, and now the curve is steepening out, and that is a bit because the long-end has just kind of given way to higher rates.»
Goldman Sachs last week pushed out its expectations for a Fed rate cut from the second quarter of next year to the fourth quarter of 2024.
Expectations for another 25 basis point hike by the Fed at its November meeting have shrunk to 18.4%, down from 34.1% a week ago.
The yield on the 30-year Treasury bond was up 12 basis points to 4.642%.
Economic data was light on Monday but investors will get a look at several data points on the housing market this week, along with the final reading of second quarter gross domestic product and personal consumption expenditures.
A closely watched part of the U.S.
