Mysterious rise in US Treasury yields perturbs markets
US treasury yields has sparked much anxiety among investors, in part because there is no easy explanation for the rise.
On Friday, the yield on the 10-year US Treasury note climbed to 4.88 percent for the first time since 2007, while the 30-year offering reached 5.05 percent, also a 16-year peak.
Both have edged back in recent days, due mainly to elevated geopolitical risk, analysts say, although yields remain high.
The most oft-cited justification for the rise has been expectations that monetary policy will stay hawkish in response to the resilient US economy.
«The Fed expectations have been shifting,» said John Canavan, analyst at Oxford Economics.
«From the Fed's perspective, we're seeing stronger than expected economic growth, some increase in inflation and uncertainty, particularly as oil prices surge again.»
While two-year US treasuries are considered the closest proxy to Fed interest rates, the market has been unsettled by the jump in yields of longer-run bonds of five, 10 or 30 years.
«Something is happening in the bond market and nobody fully understands how you kind of break it down,» said Adam Button of ForexLive.
Karl Haeling of LBBW pointed to increased bond issuance by the US Treasury Department, saying markets are increasingly worried that the US «fiscal situation is moving on a long-term unsustainably bad trajectory.»
For Yardeni Research, «the bond market has changed recently and disconcertingly,» the consultancy said in a recent posting.
Perplexing moves by US treasuries in response to economic news «suggest a shift in bond investors' focus from what monetary policymakers may do, to rising alarm about what fiscal policymakers are doing.»
«The worry is that the escalating federal budget
