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Global Bond Rout Intensifies as Fed Prompts Bets on Faster Hikes

  • Minutes showed some officials favored shrinking balance sheet
  • Markets price in strong chance of first rate hike in March
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Fed Minutes Signal Possible Faster Rate Increases
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The Treasury selloff that started the year is rippling across the globe as investors scramble to price in the risk that the Federal Reserve raises interest rates faster than currently anticipated to contain inflation.

Yields on U.S. 10-year notes climbed to 1.73% on Thursday, just shy of the 2021 high of 1.77%. The yield has spiked 22 basis points this week, set for the steepest increase since June 2020. The jump sparked a sell-off in bonds and equities across Asia and Europe, and widened divergences in rate expectations across markets.