2-year Treasury tops 4.2%, a 15-year high as Fed continues to jolt short-term rates higher

Yields rose on Friday and the yield on the 2-year Treasury note hit a new 15-year high as markets weighed the Federal Reserve’s latest rate hike and what it means for the economy going forward.

Policy sensitive 2-year treasury It hit a fresh 15-year record of 4.266% earlier in the session but was last trading 4.18% higher.

Meanwhile, the 10-year yield hit an 11-year high of 3.829% earlier in the session but last traded flat at 3.713%.

Yields and prices move in opposite directions, one basis point equal to 0.01%.

The rise in yields came as markets weighed the implications of the Federal Reserve’s latest policy decisions as it signaled its willingness to accept further recession if inflation was to keep from rising.

On Wednesday, the Fed provided another large amount. 75 basis point hike in interest rates And indicated that it intends to remain aggressive, raising interest rates to 4.6 percent in 2023 and 4.4 percent by the end of 2022. Global central banks took a note from the Fed’s playbook, implementing their substantial hikes in the wake of the decision.

“While we are probably much closer to the end of global rate hikes than we are to the beginning, it is still going to peak in global inflation and the decline in global economic activity for output to halt this growth and begin to fall.” to do,” Sevens Report’s Tom Assay wrote in a note to clients on Friday.

On the economic data front, the flash PMI data for September will be released on Friday, giving markets an early insight into the economic state of the manufacturing and services industries. The data is used as a key indicator for inflation and recessionary concerns as it reflects whether industries are expanding or contracting, as well as supply and demand.

Analysts expect the services sector to be higher after contracting faster in August. Meanwhile, growth in the manufacturing industry is set to moderate, after slowing to near 2020 levels last month.

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