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US yields jump as data raises bet on Fed spike

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The dollar also bounced against major currencies, while US stocks plunged further (Image: Pixabay/Hans )

You US Treasury Yields jumped on strong economic data that raised bets on the level that interest rates Federal Reserve can reach.

The reaction in the US bond market raised the yield on the 10-year bond by as much as 0.12 percentage points to 3.61%.

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Swaps showed a similar rise in expectations of where the Fed’s final rate will go, indicating a peak near 5% in mid-2023.

O dollar also made a leap in relation to the main coinswhile US equities deepened their decline.

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The Treasury market was already under pressure before the data on orders from factories and services that showed a more robust economic picture, but the movement extended after the numbers.

The Institute for Supply Management services indicator unexpectedly rose to 56.5 in November from 54.4 the previous month. The increase was the biggest since March 2021, suggesting most of the US economy remains strong.

“It’s a hard number to argue with,” said Tony Farren, managing director of sales and rate trading at Mischler Financial Group.

You markets may remain turbulent as the end of the year approaches and, along with it, the final 2022 Fed meeting on December 13-14.

Markets continue to price in a half point increase for this meeting, which would represent a slowdown in the pace of tightening. The Fed raised interest rates by 0.75 percentage points at its last meeting.

The market is now awaiting next week’s consumer price report.

Furthermore, liquidity — already under pressure — is typically lower towards the end of the year, meaning there is room for smaller transactions to cause disproportionate swings.

Source: Moneytimes

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