Sell-off in bonds after US inflation data

The US bond market had its worst day since March 2020. Following the higher-than-expected September inflation data in the US, the US bond market had its worst day since March 2020. On Thursday, the 30-year bond yield rose as much as 19 basis points and closed the day with a 16 basis point increase. This increase was recorded as the highest increase since the pandemic. When all maturities of US Treasury bonds were taken into account, there was an increase of at least 9 basis points, while the 10-year bond yield increased by 14 basis points to 4.70 percent, and 5 percent level began to be speculated. TD Securities strategists Gennadiy Goldberg and Molly McGown stated in a note that “Concerns about low demand for US bonds could result in a retest of new highs. There is a potential for the 10-year yield to rise to 5 percent.” The inflation data also led to an increase in the possibility of an interest rate hike in Fed swaps. This probability, which was priced at 30 percent in the swap market on Wednesday, rose to 40 percent this morning. According to Macro Hive Strategist Mustafa Chowdhury, inflation does not seem to fall as easily as Fed members predict. The strategist commented, “They will have to start raising interest rates again sooner or later.”