US bond market experiences its worst day
Following the September inflation data in the US, which came in higher than expected, the US bond market experienced its worst day since March 2020.
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On Thursday, the 30-year bond yield rose by as much as 19 basis points and finished the day with a 16-basis-point increase.
This increase was recorded as the highest since the pandemic. Considering all maturities of US Treasury bonds, there was an increase of at least 9 basis points, while the 10-year bond yield rose by 14 basis points to 4.70 percent, and the 5 percent level began to be speculated upon.
TD Securities strategists Gennadiy Goldberg and Molly McGown stated in a note they published, "Concerns about low demand for US bonds could result in the re-testing of new highs.
There is potential for the 10-year yield to rise to the 5 percent level." The inflation data also led to an increase in the probability of a rate hike in Fed swaps. This probability, which was priced at 30 percent in the swap market on Wednesday, rose to 40 percent this morning.
According to Macro Hive Strategist Mustafa Chowdhury, inflation does not appear to be falling as easily as Fed members predicted. The strategist commented, "Sooner or later, they will have to resume interest rate hikes."