Madrid/New York, Oct 23 (EFE- The yield on the 10-year US Treasury bond surpassed 5% again Monday, after briefly doing so late last week when it crossed the line for the first time since 2007.
By midday on Wall Street, the yield on the benchmark ten-year US Treasury note reached 5.019%, up from 4.916% when it closed last Friday, although it had fallen to 4.85% by the end of the session.
Experts explain that the expectation that the US Federal Reserve (Fed) will keep interest rates high for longer than expected is causing a sustained increase in the profitability of government debt.
However, US analysts noted that a well-known hedge fund manager, Bill Ackman, announced Monday that “there is too much risk in the world to bet short on bonds given current long-term rates,” after which performance fell.
Last week, Fed Chairman Jerome Powell hinted that there will be an extended period of high interest rates, and in the afternoon after the markets closed, the benchmark bond surpassed 5%.
Powell insisted that the Fed will continue to monitor economic data to adjust its rate hike, but reiterated that inflation remains high and that there is still a way to go to bring it down to 2%.
A goal that will require achieving and maintaining a “sufficiently restrictive” stance until inflation shows signs of moving closer to that goal.
The Fed has been raising rates steadily since March 2022, with exceptions in June and September 2023.
They are currently between 5.25% and 5.5%, their highest level since 2001.
The next Fed meeting is scheduled for Nov. 1.
In Europe, as in the US, interest rates are rising again after Friday’s moderation. The yield of the ten-year German bond, considered the safest on the Old Continent, reached 2.966%. EFE