By Gael Fichan, head of fixed income at Bank Syz
The U.S. bond market is experiencing heightened volatility, driven by a 60-basis-point surge in 10-year Treasury yields following the recent FOMC meeting on September 18, 2024. This upward pressure, alongside a jump in interest rate volatility and a shift to positive term premiums, signals significant shifts in market dynamics. In this analysis, Fichan explores the key factors behind these developments and considers what may unfold ahead of the U.S. elections in just one week.
The bond market shake-up: what’s fuelling it?
Since the Federal Reserve’s September meeting, 10-year Treasury yields have spiked nearly 60 basis points. This increase reflects multiple forces at play: stronger-than-expected U.S. macroeconomic data, commodity price inflation fuelled by Chinese stimulus measures, and recent statements by Fed policymakers advocating a higher terminal rate, as seen…
