10-year U.S. bond yields firmer alongside German bunds despite news of falling producer prices in Europe's biggest economy.
What’s happeningWhat’s driving markets The Bank of Japan on Tuesday surprised the market by saying it was relaxing its bond yield curve control and would now allow the 10-year government debt yield BX:TMBMKJP-10Y to fluctuate by plus or minus 0.50% from plus or minus 0.25% previously.
What’s happening What’s driving markets The Bank of Japan on Tuesday surprised the market by saying it was relaxing its bond yield curve control and would now allow the 10-year government debt yield TMBMKJP-10Y to fluctuate by plus or minus 0.50% from plus or minus 0.25% previously. The 10-year Japanese Government Bond, or JGB, yield jumped 16.2 basis points to 0.418%, causing yields to rise across the market. German 10-year yields TMBMKDE-10Y rose 6.2 basis points to 2.267% despite a report showing factory gate prices in Europe’s biggest economy fell 3.9% in November. Analysts had forecast a 2.5% decline.
Markets are pricing in a 65% probability that the Fed will raise interest rates by another 25 basis points to a range of 4.50% to 4.75% after its meeting on February 1st, according to the CME FedWatch tool. The central bank is expected to take its Fed funds rate target to 4.9% by May 2023, according to 30-day Fed Funds futures.
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