Fed officials said in public yesterday that the rise in U.S. bond yields has reduced the need for the Fed to further raise interest rates, and called on other Fed governors to be more careful about subsequent interest rate increases. This has caused U.S. bond yields to turn back from hitting recent highs. For example, the 10-year U.S. bond yield fell from 4.8% to 4.65%, which also relieved the U.S. stock and cryptocurrency markets and eased the selling pressure in both markets.
This may just be an excuse for the yield rate to rise too much, because what investors are afraid of is that the 10-year yield rate will move towards 5.2%, causing the long-term yield curve to appear straight, and then slowly return to the upward curve, and finally end the abnormal trend. The inversion of the curve actually does not conflict with what the Fed is calling for. At present, even if the Fed does not raise interest rates further, yields will only slowly move closer to the existing benchmark interest rate. Whether the Fed raises interest rates in the future will have little impact.
Tomorrow the U.S. Department of Labor will release the latest price index for September, which will serve as the basis for the Fed's subsequent interest rate decisions. However, no matter what the data results are, in the face of many uncertainties in the future and the current war and conflict, we believe that the Fed will not further adjust the benchmark. Instead of raising interest rates higher, the current benchmark interest rate level should be maintained. However, if the price index does not open well due to rising oil prices, it will accelerate the end of the inversion of the yield curve.
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