"The pricing of 10-year inflation-protected Treasuries implies inflation of 2.34% over the next decade, up only slightly from 2.25% pre-war. In other words, only about a fifth of the rise in the 10-year yield this month is accounted for by investors anticipating higher inflation."
"That points to concern over the new volatility in Treasury securities, expectations of more federal borrowing to fund the war effort and greater uncertainty about what the future looks like."
"The last month has seen enhanced volatility in the bond market as well as a rising risk premium that investors are charging to purchase U.S. Treasury securities."
The yield on the 10-year Treasury note rose to 4.45%, reflecting weak demand for government debt. Auctions for two-, five-, and seven-year notes showed lower prices and higher borrowing costs. Mortgage rates also increased significantly, with the average 30-year fixed-rate mortgage reaching 6.62%. Investors are anticipating higher inflation, but only a small portion of the yield rise is due to this expectation. The majority is attributed to a term premium, indicating concerns over volatility and future federal borrowing.
#treasury-securities #geopolitical-events #bond-market-volatility #inflation-expectations #borrowing-costs
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