{"id":8648,"date":"2023-11-02T14:10:30","date_gmt":"2023-11-02T14:10:30","guid":{"rendered":"https:\/\/infundpros.com\/business\/bond-markets-rally-as-investors-dial-down-interest-rate-expectations\/"},"modified":"2023-11-02T14:10:30","modified_gmt":"2023-11-02T14:10:30","slug":"bond-markets-rally-as-investors-dial-down-interest-rate-expectations","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=8648","title":{"rendered":"Bond markets rally as investors dial down interest rate expectations"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->UK interest rates<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=3dd4ed1c-3586-4ac7-81f9-16fa1daa7dc9&amp;concept-id=d17153e9-f07d-49ad-8dbd-4cb23d6bbc9b\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Investors have piled into US and European government bonds after the Federal Reserve bolstered the impression that central banks are at the end of their rate rise cycle.<\/p>\n<p>Yields on 10-year US Treasuries, which move inversely to prices, fell 0.19 per cent on Wednesday, the largest daily decline since the collapse of Silicon Valley Bank in March. On Thursday, yields fell an additional 0.08 percentage points to 4.71 per cent.<\/p>\n<p>The movements came after Fed chair Jay Powell made what investors saw as dovish remarks after the central bank\u2019s decision on Wednesday to hold its benchmark funds rate at between 5.25 per cent and 5.5 per cent.<\/p>\n<p>Powell emphasised that the Fed was \u201cproceeding carefully\u201d with future rate rises, comments some investors said reflected broader shifts in the long term Treasury market.<\/p>\n<p>Ten-year yields have risen sharply over the past six months, partly because of the Fed rate rises, but also as the US government has unveiled plans to issue much more debt.<\/p>\n<figure class=\"n-content-image n-content-image--full\"><picture><source media=\"(min-width: 700px)\"  width=\"1750\" height=\"1250\"><\/source><source media=\"(max-width: 490px)\"  width=\"750\" height=\"1000\"><\/source><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/11\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/e4afc7c0-796f-11ee-8879-ad8d414858e1-standard.pn.png\" alt=\"Line chart of % showing 10-year Treasury yields plunge\" data-image-type=\"graphic\" width=\"1750\" height=\"1250\"><\/picture><\/figure>\n<p>Some economists say that higher borrowing costs relieve pressure on the Fed to increase interest rates further to rein in the US economy and bring down inflation. <\/p>\n<p>Government bond markets also rallied across Europe, with gilts advancing as the Bank of England announced it would hold rates at 5.25 per cent. <\/p>\n<p>Two-year gilt yields, which reflect interest rates expectations, fell 0.06 percentage points to 4.74 per cent, the lowest level since June. Benchmark 10-year gilt yields fell 0.11 percentage points to 4.39 per cent.<\/p>\n<p>Ten-year German bond yields \u2014 the benchmark for the eurozone \u2014 fell 0.05 percentage points to 2.7 per cent. The shift came as data showed the German jobless rate rose to 5.8 per cent in October \u2014 the highest since June 2021 \u2014 a sign of a stagnating economy and higher borrowing costs.<\/p>\n<p>In the US, Powell warned that the Fed \u201cwas not confident yet\u201d that monetary policy was sufficiently restrictive to bring inflation back to its 2 per cent target.<\/p>\n<p>But Deutsche Bank research strategist Jim Reid said the Fed chief\u2019s remarks had a \u201cdovish tilt\u201d, highlighting Powell\u2019s comment that \u201cmonetary policy is [already] restrictive\u201d.<\/p>\n<p>Government bond yields were also pulled lower after the US Treasury department announced on Wednesday it would slow the pace at which it issues longer-dated debt. Much weaker than expected US manufacturing data then helped fuel the Treasury rally, outweighing buoyant labour market data.<\/p>\n<p>\u201cInitially the rally was around less long-end US Treasury issuance than expected, and it really was US Treasury focused. But then a much weaker ISM [Institute for Supply Management] report than expected suggested that US growth momentum is waning,\u201d said Mike Riddell, a bond fund manager at Allianz Global Investors. <\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/3dd4ed1c-3586-4ac7-81f9-16fa1daa7dc9\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the UK interest rates myFT Digest &#8212; delivered directly to your inbox. Investors&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-8648","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bond markets rally as investors dial down interest rate expectations | inFundPros<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the UK interest rates myFT Digest -- delivered directly to your inbox.Investors have piled into US and\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=8648\" \/>\n<meta property=\"og:locale\" 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