(Jan 28): To many on Wall Street, the painful selloff that’s been racing through the Treasury market this month is only the opening act. On Wednesday, Federal Reserve Chair Jerome Powell’s hawkish tone added fuel to the rout after he said the bank is poised to start raising interest rates in March, sending two-year Treasury yields surging the most since March 2020. Despite the sharp rise in Treasury yields this month, those rates -- which serve as a benchmark for the financial system -- remain historically low, with yields still below the expected rate of inflation. The inflation adjusted, or real, 10-year Treasury yield is at minus 0.55%, a sign of ultra loose financial conditions. “The Fed is going to ultimately have to do something about it and I don’t think 7 hikes are going to do it.

Source: The Edge Markets January 28, 2022 16:51 UTC