US Treasury yields rise to four-month high

Yields creep up as Fed policymakers discuss state of US economy before November meeting

US Treasury yields crept ever higher on Tuesday, as the market anticipated a series of speeches from members of the Federal Reserve (Fed) in advance of the bank’s November policy meeting. 

The meeting will take place as concerns about runaway levels of inflation continue to dominate headlines and politician’s talking points. 

Producer prices in the world’s largest economy rose for the ninth month in a row in September to their highest level in 30 years, while consumer prices jumped to a 13-year high.

At their most recent meeting, Federal Reserve policymakers raised their inflation forecast for the year to 4.2%, more than double the bank’s 2% target.

In such an environment, the Fed is expected to start to taper the substantial bond purchasing programme that it started out on in response to the Covid-19 crisis in spring of last year. 


In addition to his longstanding view that runaway inflation would prove to be transitory, Fed Chairman Jerome Powell has consistently listed a recovery in the US job market as a precondition for the lifting of any support. 

With US workers quitting their jobs by the most on record in August and the number of jobs in the US still below pre-Covid levels, Powell has more recently recognised the possible threat of stagflation, wherein prices accelerate quickly and unemployment remains high. 

Speaking at a recent forum at the European Central Bank, Powell stated: "This is not the situation that we have faced for a very long time and it is one in which there is a tension between our two objectives...Inflation is high and well above target and yet there appears to be slack in the labor market.”

By 13:00 EST (UTC -4), the 10-year Treasury yield stood three basis points higher at 1.629%, having earlier reached a four-month high of 1.636%. 

The 30-year Treasury yield traded up by four basis points to 2.084%.

Further reading: Brent dips after breaking $85

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