Fed Rate Hike Calms Global Bond Market Amid Inflation Fears
Global bond yields retreated on Thursday as the US Federal Reserve's rate hike and vow to tame inflation calmed a pressured market.
The 10-year Treasury yield fell three basis points to 4.99%, ending eight days of gains, while similar-tenor notes declined in Australia and Japan by four and less than one basis point respectively.
The average yield on global government bonds climbed to a 19-year high this week as escalating Middle East tensions drove up oil prices and fanned inflation expectations.
Byron Anderson, head of fixed income at Laffer Tengler Investments, said 'The Fed had no choice but to give the market a hike or risk a much bigger bond market sell-off.'
The central bank's favoured inflation gauge stood at 3.7% in July, close to the highest since 2023 and above the Fed's long-run target of 2%.