Debt Markets Brace for Higher Yields to Stay as Stimulus Sets In
- Moves higher in U.S. yields seen as start of much bigger reset
- ‘Tantrum without the taper’ likely to also hit currencies: BNY
The U.S. Treasury building in Washington, D.C.,
Photographer: Al Drago/BloombergPresident Joe Biden’s $1.9 trillion relief plan, plus the prospect of more stimulus later this year, is setting the stage for a shift away from historically low Treasury yields that’s likely to lead to a pickup in volatility in currency markets.
U.S. yields have marched higher even before the plan’s arrival -- offering an inkling of what may be in store. BlackRock Inc. sees as much as $2.8 trillion in additional fiscal spending this year and the risk of a further rise in long-term rates. BNY Mellon’s John Velis says a 2% 10-year Treasury yield is possible by April as part of a “tantrum without the taper” of Federal Reserve bond purchases. And volatility in currencies is so low that it’s all but certain to go up, says Harley Bassman, creator of a widely watched gauge of Treasury-market movements.