Traders Amp Up Fed Hike Bets on Powell, Driving Yield Curve Flatter
- Money markets now pricing in more policy tightening for 2022
- Rate on 30-year bond falls to lowest level since January
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Traders boosted bets on the pace of Federal Reserve policy tightening on the back of comments by Chair Jerome Powell about the prospects for faster asset-purchase tapering, pushing the Treasury yield curve to its flattest level since the early months of the Covid pandemic.
The yield on the 30-year bond fell as much as 8 basis points to 1.77%, its lowest since January. The move took its yield premium over the five-year rate, a widely watched measure, down more than 11 basis points to 59 basis points, a level last seen in March 2020.