. The rout was further fueled by a weak auction of 30-year Treasuries, as yields climbed back near levels seen ahead of Powell’s remarks.
Still, the jump in Treasury yields didn’t appear to herald a major reconsideration of the Fed’s approach to monetary policy, and other sell-offs have been short-lived as investors came in and bought the dips.Money-market traders moved forward their bets for the Fed’s first hike by two months to July, although they’re only pricing in about two quarter-point increases in 2022, signaling little concern the bank will find itself fighting against runway inflation.
“We are finding out that we cannot ignore this inflation problem,” Goncalves said. “Risks are growing that rates will become more volatile and potentially heading higher ahead, just not in one go. It was a shot across the bow.”Yields across much of the U.S. curve leaped more than 10 basis points on the day, with those in the so-called belly — around 5-to-7 years — seeing the biggest jumps. The dollar gained 0.9%, the biggest advance since December.
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