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Treasury Yields Jump as Conviction on Fed Hikes Grows

  • Key economic data this week may reinforce expectations
  • Two-year yield exceeds 0.80%, highest since March 2020


By Michael MacKenzie and Edward Bolingbroke
(Bloomberg) — Treasury yields surged on the first trading
day of 2022 in a flush of economic optimism drew a raft of
corporate bond sales and reinforced expectations for at least
three Federal Reserve rate hikes this year.
Benchmark yields climbed across the curve, led by the
policy-sensitive five-year note, which rose nearly 8 basis
points to 1.34%. The two-year yield topped 0.79%, its highest
level since March 2020. Yields remained higher even as U.S.
equities stumbled at the cash open.
This week is replete with key economic events — led by the
December employment report and the release of the minutes of the
Fed’s last meeting — with the potential to build a case for
rate hikes starting sooner than May, the current expectation.
“March will be a live meeting and stronger data this week
means it is not inconceivable we see lift off that early,” said
Gregory Faranello, head of U.S. rates at AmeriVet Securities.
“The move higher in rates is not surprising as the market
expects the Fed will lift off this year.”
Based on current interest-rate futures prices, the first
increase in the fed funds target is estimated for May, with 77
basis points of tightening expected by the end of the year.
Strategists surveyed by Bloomberg expect Treasury yields will
end 2022 at higher levels, with the two-year climbing to 1.12%
and 10-year notes reaching 2.04%.

To contact the reporters on this story:
Michael MacKenzie in New York at;
Edward Bolingbroke in New York at
To contact the editors responsible for this story:
Benjamin Purvis at
Elizabeth Stanton, Stephen Kirkland

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