Bond Report: Treasury yields slightly softer amid recession concerns

by | Dec 7, 2022 | Stock Market

U.S. bond yields fell were fractionally lower Wednesday morning as investors concerns about a slowing economy in 2023 lingered.What’s happening
The yield on the 2-year Treasury
slipped 1.7 basis points to 4.350%.

The yield on the 10-year Treasury
retreated less than 1 basis point to 3.530%.

The yield on the 30-year Treasury
fell 1.1 basis points to 3.534%.

What’s driving markets Benchmark 10-year Treasury yields were a fraction softer and holding just shy of their lowest levels in nearly three months, on lingering investor concerns that inflation-fighting interest rate hikes by the Federal Reserve could trigger a downturn.

The yield spread between 2-year and 10-year Treasuries sits at minus 82 basis points, near the widest since 1981. An inversion so great has usually preceded a recession. After recent sturdy economic data, which has raised short-term yields in anticipation of more Fed interest rate increases, Jamie Dimon, CEO of JPMorgan Chase, on Tuesday said the central bank’s tighter monetary policy will likely “cause a mild or hard recession” within “six to nine months”. Markets are pricing in a 77% probability that the Fed will raise its policy interest rate by another 50 basis points to a range of 4.25% to 4.50% after its meeting on December 14th, according to the CME FedWatch tool. The central bank is expected to take its Fed funds rate target to 4.95% by May 2023, according to 30-day Fed Funds futures. U.S. economic updates set for release on Wednesday include third quarter productivity and unit labor costs at 8:30 a.m. and consumer credit for October at 3 p.m.. All times Eastern. Ten-year German bund yields
fell 1.8 basis points to 1.785% after data showed the country’s industrial production declined in October. Benchmark 10-year gilt yields
were little changed and at 3.080% were hovering just above three month lows after a survey from mortgage lender Halifax showed U.K. house prices falling in November …

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