For the first time in 16 years… US Treasury bonds rise 5%

For the first time in 16 years… US Treasury bonds rise 5%

On Friday, there was a brief moment when the dollar reached the 150 level against the yen, which is closely monitored. This was due to the rise in 10-year US Treasury yields towards 5% after Federal Reserve Chairman Jerome Powell hinted that there could be further interest rate hikes.

The yield on the benchmark 10-year Treasury note rose 30 basis points this week, marking its biggest weekly increase since April 2022.

The conflict in the Middle East triggered a flight to safety among investors, with gold and the Swiss franc being the preferred safe-haven assets, while trading in Treasuries was dominated by interest rate expectations.

Despite the rise in bond yields, the dollar did not see a significant improvement this week. It only made slight gains, hovering around 150 yen. This mark is seen as a potential level where the Japanese Ministry of Finance may take action to prop up the yen.

Speculators have increased their bullish positions in the dollar against other G10 currencies to the highest level in a year this month.

The USD/JPY pair settled at 149.870 on Friday, after rising to 150.00, and typically follows US 10-year bond yields.

Traders expect no change in interest rates at the next Fed policy meeting.

According to a recent Reuters poll, the likelihood of an interest rate cut in the first half of next year is diminishing quickly.

The pound dropped by 0.37% to two-week lows following a series of data indicating a collapse in British consumer confidence in October after weak retail sales the previous month.

The British pound dropped 0.2% to $1.2116, reaching its two-week low levels.

The euro stabilized at $1.0572, while the Swiss franc, which received demand from safe haven flows, is heading for its largest weekly gain against the dollar in three months, after rising one percent.

The Swiss franc has reached its highest level against the euro since 2015, when the Swiss National Bank removed the peg between the two currencies. As of the latest trading, the Swiss franc settled at 0.94345 against the euro on Friday.

In the external market, the Chinese yuan settled at 7.3361 to the dollar, as China kept its key lending interest rates unchanged at the monthly fixation on Friday, which was in line with market expectations.