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Treasury yields increase as investors look to Fed speakers for hints regarding U.S. financial outlook

January 23, 2023: U.S. Treasury yields increased as investors awaited remarks from Federal Reserve speakers and weight the outlook for the U.S. economy.

The standard 10-year Treasury trading at 3.435% after increasing by three basis points. The yield on the 2-year Treasury was previously up by more than four basis points at 4.166%.

Yields and costs have an inverted relationship. One basis point equals 0.01%. 

On Friday, investors looked ahead to a series of comments from Fed speakers anticipated as uncertainty more than the central bank’s following welfare rate determination continued off the back of mixing economic data.

Thursday’s initial jobless claims reflected resilience in the labour market as figures declined to their lowest level since late June. Tightness in the work market is one of the areas the Fed has been targeting in its fight against persistently high inflation.

Therefore, wholesale inflation figures released earlier in the week showed that prices slipped more than expected throughout December, prompting a few investors to believe that peak inflation has passed.

Investors consider whether the Fed will hike rates by 50 basis points or slow the rate increases to 25 basis points when its meeting ends on February 1.

They have been nearly following Fed speakers’ remarks and scanning them for hints concerning the central bank’s view.

On the data front, living home sales figures are due on Friday and will provide fresh insights into the housing sector.

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Treasury yields increase as investors look to Fed speakers for hints regarding U.S. financial outlook