US Rates Run Up Spell Continues As Market Walk Into Thursday’s CPI Release

US Rates continue to spike as its upward trend grows, evidenced by the high-powered push on the short end of the Treasury yield curve.

Critical economic indicator, the consumer price index CPI, gives traders and Investors insight into a region’s economic growth and inflation levels. Info tracked by the CPU targets purchasing ability and increasing price value of goods and services in a particular economy, which can effectively be leveraged to influence a sovereign state’s monetary policy.

The United States’ CPI will be released tomorrow. Markets and analysts are moving into the opening session tomorrow with expectations of an increased inflation level that may highlight an over 7% increase in growth.

Recently, the noticeable high inflation rate impact has resulted in a price-in to global markets with intense activities and spikes in the short end of the Treasury yield curve.

2-Year US Treasury Note Yield

The record yield on the 2-year Treasury notes is 0.94%, increasing from a November low of 0.45%. This is a record-high increase in a very short timeframe, a scenario that has not been fielded in the market in a particularly long time. The 58 basis points pinned to the two-year rates astonishingly eclipses the similar spike the 10-year notes fielded

10-Year US Treasury Note Yield

The over 0.4% spike in yield of 2-year notes has set a precedent by eclipsing the record high of its senior 10-year yield counterpart. The 10-year yield fielded a year-long record high that hasn’t been seen since the Covid-19 pandemic after the Non-Farm Payroll (NFP) release. The yield jump fr the last lowest low in December to the .lst recent high is a 46.5 basis point which is still less than the record 49 basis points the 2-year rates have fielded.

30-Year US Treasury Note Yield

The 30-year Treasury bond has also experienced gains on the upside of 40 points basis. However, despite the success it has fielded, its growth still falls short of the record growth observed on the short end of the Treasury yield curve with the 2-year note. Since setting a low of 1.678%, the 30-year Treasury bond gradually rose to breach a new high of 2.151% late last week. This move fields a record of 48 points basis, the 48 points fielded is nevertheless lesser than 2-year rates points basis, this doesn’t dampen its success however as its points still eclipse the 10-year bonded rates of 46.5 points basis.

US Treasury Yield Curve Compression

As the advent of overall yield increase continues to converge with more focus being trained on the short end of the curve, the new framework dynamics have become a vital point in the sector of priced-in equities in the market.

Rate-sensitive Nasdaq 100 has been of great interest recently; it has been a major topic for discussion in various forums and platforms in the community and amongst traders and Investors. As one of the most successful indexes post-Covid pandemic that fielded a year-long bullish run in 2021, a run that started since the US presidential elections, its possible price reversal has made waves in the market.

The Nasdaq 100 price is currently threatening to break the bull run as it fell below a year-long low earlier yesterday; price quickly corrected itself; however, most in the community perceive this as a scenario where the trend is stuck, and a possible long term bear is on the horizon.