Fed chief offers reasons for bond rout as 10-year yield nears 5%
Federal Reserve Chair Jerome Powell on Thursday offered up reasons for the continued surge in long-term Treasury yields, and may have unintentionally egged on traders to keep pushing them higher, according to a top Fed watcher.
“It’s really happening in term premiums, which is the compensation for holding long-term securities, and not principally a function of the market looking at near term fund rates,” Powell said during the question-and-answer session following his speech to the Economic Club of New York.
“We do not think Powell intends to green light a further yield move higher, but we worry the bullish growth/hands off tone on yields may mean this is how his remarks are interpreted,” Guha wrote.The rise in yields was blamed for sinking stocks, with the Dow Jones Industrial Average DJIA ending the day down more than 250 points, or 0.7%, while the S&P 500 SPX declined 0.8% and the Nasdaq Composite COMP lost 0.9%.
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