10-year Treasury yield hits 2.82% as market expects more Fed rate hikes

Yahoo Finance’s Brian Cheung and Brian Sozzi discuss the 10-year Treasury yield as March CPI data becomes public.

影片文字轉錄稿

BRIAN SOZZI: Hang with us because number two on our list are, is soaring Treasury yields turning our attention to the bond market off of that hot CPI report? Yields continue to creep higher. You have the 10-year yield hovering around 2.82%. That is the highest print since December of 2018. Brian, how-- you know, we're going to get commentary later on today. I believe it's 12:10 from Lael Brainard. And her commentary last week, I would argue, has sent yields much higher since then. You know, is there anything that she could say today that might cool the move in yields? Or she's likely to stay the course with her calls?

- Yeah, it was absolutely the case that over the past, let's say, two weeks of trading sessions, the day where we saw the most volatility in Treasury markets and fixed income broadly was after the Lael Brainard remarks, I believe it was, last week. So she is going to speak again at noon today. And this will be the first kind of post reaction to the CPI report that we've heard from the Fed governors. So you should expect to see a little bit more volatility headed into and then out of that speech.

But look, what I've been hearing when it comes to Treasury yields at large is that there's no reason why the 10-year stops here. It's likely going to be the case that the next stop for the 10-year is going to be 3%, which would be another 25 or so basis points from where we are right now. And this makes sense when you consider that Federal Reserve officials like the likes of St Louis Fed President James Bullard-- some have considered him to be an outlier-- but he said interest rates probably have to be 3% higher than they are right now.

And when you take a look at the 10-year as a proxy for where medium- or longer-term interest rates could be, that suggests that the Fed would not stop hiking interest rates at a 2.75% short-term target, which means if it is indeed the case that some Fed officials would like to see the Fed ratcheting rates another 300, 325 basis points, then the 10-year likely will want to reflect the fact that the Fed is not going to stop there.

So seems like the bus is definitely still going on this. Whether or not we see the 10-year go even perhaps above 3% is very much up for debate. But it seems like there's no signs, at least for right now, that the fixed-income markets will stop the trend that we've seen of the short selling and dropping of these fixed-income instruments.