The 10-year interest rate hit a fresh 3-year high on Friday as investors continued to digest minutes from the last Fed meeting.
Yields on the benchmark 10-year Treasury bond traded around 2.70% on Friday morning, near the highest level since March 2019 as it continues its plunge following recent Fed comments. The 2-year rose about 4 basis points to 2.5%.
The yield on the 30-year government bond rose 3 basis points to 2.72%, while the 5-year rose 5 basis points to 2.74%. Yields move inversely with prices and 1 basis point equals 0.01%.
The 10-year rally comes after Fed minutes released Wednesday indicated the central bank plans to shrink its balance sheet by $95 billion a month. Fed officials also hinted that one or more rate hikes of 50 basis points could be on the cards.
This more aggressive monetary tightening, coupled with rising inflation, has resulted in a reversal in yields. Investors have sold shorter-dated government bonds in favor of longer-dated government bonds, signaling concerns about the near-term health of the economy, with fears of a recession mounting.
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Investors continue to monitor developments in Ukraine as the US Congress voted to remove Russia’s trade status and ban oil and gas imports. This was followed by reports of rape and torture of civilians by Vladimir Putin’s forces, which were harshly condemned by G-7 members who voted to remove Russia from the UN Human Rights Council.
— CNBC.com employees contributed to this market report.