FX.co ★ US 10-Year Yields Rise Further

On Tuesday, the yield on the 10-year US Treasury note surpassed the 4.1% milestone, continuing the upward trend initiated in the previous session. This development comes amidst expectations of increased interest rates from major foreign central banks and a partial revival in domestic risk sentiment. On Monday, global bond markets experienced turbulence following remarks from the Bank of Japan's Governor, suggesting a possible interest rate hike within the month. An increase in Japanese rates might drive domestic investors to favor local bonds over more lucrative foreign investments, such as US Treasuries. Concurrently, the rise in yields corresponded with gains in high-risk speculative assets, such as cryptocurrencies and stocks related to artificial intelligence. These assets have seen a modest rebound after initial concerns about high valuations led to a market selloff of speculative assets in late November, with a shift towards bonds and precious metals. Despite these dynamics, rate futures continue to anticipate a 25 basis point rate reduction by the Federal Reserve next week, following statements from prominent Fed Governors emphasizing the necessity to bolster a softening labor market.