10-Year Bond Yield Surges Past 5% as Investors Eye Fed Officials' Remarks

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The yield on the 10-year U.S. Treasury note climbed above 5% today as investors awaited remarks from Federal Reserve officials. As of 9:27 p.m. Thailand time, the 10-year Treasury yield stood at 5.004%, while the 30-year Treasury yield was at 5.338%. Investors are watching today's comments from Fed officials, including Michelle Bowman, a member of the Federal Reserve Board of Governors and a permanent voting member of the Federal Open Market Committee, as well as Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, for signals about the officials' thinking on monetary policy. The Federal Open Market Committee voted unanimously, 12-0, to raise short-term interest rates by 0.25% to a range of 3.75-4.00% at its meeting on September 16, in line with market expectations. The increase was the first in more than three years, or since July 2023, and since then the Fed had cut rates six times, by a total of 1.75%. The Dot Plot report showing Fed officials' projections indicated that 16 of 18 officials expect one more rate hike this year. In addition, Fed officials expect rates to end 2026 and 2027 at the same level, while the Fed will cut rates once each in 2028 and 2029. Bob Edwards, chief investment officer of Edwards Asset Management, said that if the Fed raises rates again, it would likely happen at the December meeting, since the Fed is unlikely to announce a rate change at its October meeting, which takes place just days before the November 3 midterm elections, for fear the decision would be seen as politically motivated.

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Effective Federal Funds Rate
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Fed raised rates 25bp to 3.75-4.00% and 16 of 18 officials expect one more hike this year, pushing the effective policy rate higher.