Treasury bond yields near peak as Fed hikes rates, recession fears grow
June 28, 2022 | Brian Scheid | S&P Market Intelligence
The growing likelihood of a recession has paused the months long selloff in U.S. government bonds. Whether that pause represents a peak in Treasury yields, though, will depend on the future path of inflation.
The benchmark U.S. Treasury 10-year bond yield rose 197 basis points from 1.52% to 3.49% from January 1 to June 14, surging as the Federal Reserve ended its pandemic-era monetary policy, hiking rates and stopping buying $120 billion in bonds every month. The two-year yield rose 272 basis points over that same period, from 0.73% to 3.45%.
Since the Federal Reserve hiked rates in mid-June, however, bond yields have retreated. The 10-year fell 36 basis points and the two-year fell 41 basis points from June 14 to June 24.
“There is a good chance that the peak in yields has been reached,” said Kathy Jones, managing director and chief fixed-income strategist with the Schwab Center for Financial Research.
