Wednesday, May 18

US two-year yield hits 23-month high in Asia

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TOKYO — US Treasury 2-year yields climbed to a 23-month high at the start of Asian trading on Thursday, a day after Federal Reserve Chair Jerome Powell struck a hawkish tone, flagging an interest rate increase in March and saying there is room for further policy tightening without hurting employment.

US 2-year yields, which reflect interest rate expectations, rose as high as 1.1720%, topping Wednesday’s 1.1640% peak.

Yields on some other tenors eased in early Asian hours, with the benchmark 10-year Treasury note yielding 1.8566%, down from a high of 1.8800% in the previous session, flattening the so-called yield curve.

The five-year Treasury yield stood at 1.6812%, down from a nearly 25-month top of 1.6980% overnight.

Powell, in his news briefing after the Federal Open Market Committee (FOMC) held rates steady, said the committee is “of a mind” to raise rates in March, and will “move steadily away” from highly accommodative monetary policy this year.

Fed funds futures have fully priced in a quarter-point tightening for the Fed’s March meeting, and another three hikes for 2022. (Editing by Chris Reese)