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U.S. bond yields rose across the board at the start of the year, with the 10-year yield returning to above 3.9%

2024-01-03

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As trading begins in 2024, U.S. bond yields rose across the board on Tuesday (January 2) local time, and market doubts about the interest rate vision and economic conditions remain. For U.S. bonds, 2023 will be a tumultuous year. The 10-year U.S. bond yield once rose above 5% in October and closed at around 3.9% at the end of the year.

As of Tuesday's close, U.S. bond yields have collectively risen. The 2-year U.S. bond yield rose 7.5 BPs to 4.333%, the 3-year U.S. bond yield rose 8 BPs to 4.096%, and the 5-year U.S. bond yield rose 6.7 BPs to 3.92. %, the 10-year U.S. bond yield rose 5.4 BPs to 3.936%, and the 30-year U.S. bond yield rose 4.5 BPs to 4.075%.

In terms of existing data, the U.S. Treasury Department report showed that the total U.S. national debt exceeded US$34 trillion for the first time, equivalent to a debt of US$102,400 per American.

Fundamentally, in November, the United States added 199,000 jobs, while the unemployment rate unexpectedly fell to 3.7%. At present, the market generally expects that the Federal Reserve's interest rate hike cycle is nearing its end. The Federal Reserve has kept interest rates unchanged at the past three meetings and is expected to cut interest rates in 2024, but there are still different expectations for when it will start.

“We don’t expect to see a significant contraction in employment just yet, but we remain cautious as we head into 2024,” the Jefferies economics team wrote in a research note. As the UAW The (UAW) strike has finally settled, and the swings in manufacturing employment over the past few months are expected to level off."

According to Ellen Zentner, chief U.S. economist at Morgan Stanley, data like the December jobs report must show more signs of a cooling economy, with markets currently expecting a 3 The interest rate cut will not happen until next month.

Zentner also believes that by the time the February report is released, the number of new jobs must fall below 50,000, consistent with continued low inflation data, before the Fed will cut interest rates in March. "Even so, the employment slowdown has to be a trend, not just one or two numbers."

According to CME's "Fed Watch", the probability of the Federal Reserve keeping interest rates unchanged at 5.25%-5.50% in February is 87.1%, and the probability of cutting interest rates by 25 basis points is 12.9%. The probability of keeping interest rates unchanged by March 2024 is 20.9%, the probability of a cumulative 25 basis point interest rate cut is 69.3%, and the probability of a cumulative 50 basis point interest rate cut is 9.8%.

In the primary market, the winning interest rate for the 42-day cash management notes issued by the U.S. Treasury Department was 5.290%, compared with 5.280% last time (December 27).

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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U.S. bond yields rose across the board at the start of the year, with the 10-year yield returning to above 3.9%

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