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On 7 July, yields on U.S. treasury bonds fell to 1.32 percent, their lowest return since 18 February, the Wall Street Journal reported.
Investors grew skittish about the bumpy economic recovery and news from Israel that Pfizer’s COVID vaccine might not be thoroughly effective against the virus’s highly contagious Delta variant spreading around the world, the WSJ said.
Yields fall when bond prices are bid up, in this case by investors seeking security over risk.
In addition to setting borrowing costs across a range of markets, treasury yields also serve as a bellwether: long-term yields rise when the economic future looks bright and fall when that future darkens.
The yield rate dropped early in the 7 July trading session and failed to recover when the U.S. Federal Reserve released minutes of its Open Markets Committee meeting that day.
Some Fed officials are urging the bank to pare back its $120-billion monthly bond-buying campaign sooner than what is now planned because of the economic recovery’s progress, the minutes showed.
Ten-year treasury bond yields closed at 1.368 on 12 July.
TRENDPOST: Following today’s Labor Department’s consumer price index report which showed sharply rising inflation, the benchmark 10-year Treasury spiked 4.6 basis points to 1.412 percent as we go to press.
The yield on the 30-year Treasury bond jumped 4.5 basis points to 2.038 percent.
Thus, as goes inflation, so too go yields.
TRENDPOST: U.S. consumers expect inflation to accelerate to a median 4.8 percent during the next 12 months, according to June’s Survey of Consumer Expectations, conducted by the Federal Reserve Bank of New York.
Consumers polled a median of 4.0 percent in May.
June’s figure is the highest since the bank began the survey in 2013.
Consumers’ view of inflation over the next three years remained unchanged in June at 3.6 percent.
Wages will rise an average of 2.6 percent this year, according to survey respondents, which is below the inflation rate.
People responding to the poll expect home prices to rise 6.2 percent this year, although the level of uncertainty around that forecast was the highest in the survey’s history.
Officials of the U.S. Federal Reserve continue to insist that inflation’s current pace is temporary and will recede as supply bottlenecks are resolved and consumers’ pent-up demands are satisfied.
The Fed has said that inflation will settle at no more than 3 percent later this year and fall to 2.1 percent in 2022.