The Yield On The 2-year Treasury Note Has Topped 4.6% Despite Growing Concerns About A Recession

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Last Updated on October 20, 2022 by Bitfinsider

On Thursday, yields on all maturities of Treasury notes and bonds increased, with the yield on the 2-year note reaching a new high point in 15 years as worries about the possibility of a recession reverberated throughout global markets.

After an increase of six basis points, the yield on the policy-sensitive 2-year Treasury note was most recently recorded at 4.612%. Prior to this, it had not been this high since 2007.

On Thursday, the yield on the benchmark 10-year Treasury note reached a level that had not been seen in over 14 years, during the middle of 2008. The yield reached a high of 4.18%. The most recent increase was 3.8 basis points, bringing the rate to 4.167%.

Prices and yields generally move in the opposite direction, and one basis point is equal to 0.01% of the total.

On Wednesday, data from the United States showing housing starts and building permits for September came in lower than expected. This was widely interpreted by investors as a sign that the housing sector is entering a recession.

The Federal Reserve has been raising interest rates to combat persistent inflation, which has caused many of them to be concerned about the possibility of a contraction in the economy.

Charles Evans, president of the Chicago Federal Reserve, addressed the media on Wednesday, stating that inflation was “much too high” and that the central bank needed to maintain the policy that it has been implementing thus far. However, he continued by saying that raising interest rates any further would “burden the economy.”

At its upcoming meeting on November 1 and 2, the central bank is anticipated to implement yet another increase in interest rates by 75 basis points.

On Wednesday, the data for existing home sales in September will be released, which will provide investors with additional insights into the housing market in the United States. Investors will also pay close attention to additional Fed speakers as well as earnings reports on that day.

Bond markets all over the world are feeling the pressure of persistently high inflation and the associated fears of recession, which is causing yields to rise.

The yield on the German 10-year bund rose by approximately 8 basis points to 2.448% most recently, reaching levels not seen since 2013 at this point. In the meantime, the yield on the 10-year British gilt increased by 9 basis points to reach 3.964% despite the economic instability in the UK.

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