Treasury yields down, but not out

Treasury yields in the US are trading weak in Asia as markets were disappointed by noncommittal stance of Fed policymakers highlighted by the minutes released overnight.

At the time of writing, the 2-yr yield, which is closely related to short-term rate hike bets/inflation expectations, was down about two basis points at 0.718%. On similar lines, the benchmark 10-yr yield was down at 1.537%.

Range still intact

The yields are down but definitely not out. For example, the 2-yr yield is still well inside the range of 0.80-0.60, which has been in place since July 26.

Moreover, expectations that Fed minutes could talk up rate hike bets had gathered pace following hawkish comments from Fed officials earlier this week. Hence, markets were disappointed by the ‘neutral/data dependent’ stance of the policymakers.