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16 Sep 2015
Two-year treasury yield backs-off from 4-year high
FXStreet (Mumbai) - The two-year treasury yield in the US session backed-off from the 4-year high of 0.819% after the data in the US showed the core inflation stagnated in August, while the headline figure printed negative.
The short duration treasury yields are known to represent the short-term rate hike expectations in the US. The two-year yield now trades at 0.787%; down 1.2 basis points on the day. It was largely stuck in the range of 0.60%-0.75% for almost a month, before it rose to 0.8% on Tuesday.
The core CPI in August remained unchanged at 1.8% y/y, as opposed to a rise to 1.9%. The headline CPI m/m fell 0.1% as expected, mainly due to the sharp drop in the energy prices.
The data raised questions on whether the Fed would be able to reach its target of 2% annualized inflation in the desired time limit. Consequently, the 2-yr yield, representing rate hike bets, turned lower ahead of Thursday’s FOMC interest rate decision.
The short duration treasury yields are known to represent the short-term rate hike expectations in the US. The two-year yield now trades at 0.787%; down 1.2 basis points on the day. It was largely stuck in the range of 0.60%-0.75% for almost a month, before it rose to 0.8% on Tuesday.
The core CPI in August remained unchanged at 1.8% y/y, as opposed to a rise to 1.9%. The headline CPI m/m fell 0.1% as expected, mainly due to the sharp drop in the energy prices.
The data raised questions on whether the Fed would be able to reach its target of 2% annualized inflation in the desired time limit. Consequently, the 2-yr yield, representing rate hike bets, turned lower ahead of Thursday’s FOMC interest rate decision.