When Treasuries catch Korea's volatility bug, take cover
TLT•The U.S. 10-year Treasury yield reached 5.2251%, a 19-year high, while the 30-year yield rose to 5.5016%, its highest since 2004. Futures priced a 70% chance of another Federal Reserve rate hike next month.
1. Treasury yields surge
The benchmark U.S. 10-year yield climbed nearly 20 basis points in two sessions, breaking above 5% and reaching 5.2251%. The 30-year yield rose 16 basis points to 5.5016%, its highest since 2004. A Treasury buyback managed just $4 billion of the $6 billion scheduled.
2. Global rates rise
The sell-off spilled into Asia, with Japanese government yields reaching levels not seen since 1996 and Australian 10-year yields nearing a 15-year high. Futures priced a 70% chance of a Federal Reserve rate hike next month and as much as 90 basis points of tightening in the cycle. Norway's central bank surprised with a rate hike, while Sweden's central bank signalled it was likely to follow by year-end.
3. Stocks hold steady
Despite higher yields, Nasdaq futures held steady, Japan's Nikkei rose 1.2%, and European shares were set for a higher open, with pan-region stock futures up 0.6%. Oil slipped 1%, while Brent remained at $105 a barrel.
