Lates News

In overnight US trading, US Treasuries rebounded sharply, reversing the selloff triggered by the latest higher-than-expected inflation data, with yields on most maturities turning lower. This highlights the market's tug-of-war between two scenarios: on one hand, accelerating consumer price data, and on the other, Fed officials signaling they are in no rush to raise rates further. Official US data showed that the US September CPI rose 3.7% year-on-year, exceeding market expectations of 3.6%. After the data release, the 2-year Treasury yield climbed to its highest level in more than two weeks, before falling back from intraday highs along with longer-dated yields. Traders' bets on a Fed rate hike in October rose from 22% before the data to about 40%, and as of press time, the probability had fallen back to 33%. TD Securities US rates strategist Brooks said the changes in rate-hike odds and bond yields are likely closely related to recent dovish comments from several officials, including New York Fed President Williams and Fed Vice Chair Jefferson. Brooks said that for now, a 50/50 probability of an October hike seems quite reasonable, because the data may be signaling one thing while the Fed is signaling another.