U.S. 10 - year yield hits highest since June

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U.S. 10 - year yield hits highest since June

U.S. 10 year yield hit highest since early June U.S. 20 year, 30 year yields touch one-week highs U.S. 5 30 yield curve sharpens to 92.8 basis points Adds new comment, Fed's Waller's remarks, updates prices By Gertrude Chavez-Dreyfuss NEW YORK, Oct 19 Reuters - The U.S. Treasury yield curve widened on Tuesday as investors unwound flattening moves of the last The steepening of the curve extended further after weaker than expected U.S. housing data. The benchmark 10 year Treasury yield rose meanwhile to its highest in more than four months. U.S. fed fund futures, which track short-term Federal Reserve rate expectations, on Tuesday priced a 64% chance of rates hike in July next year, down from 82% on Monday. Traders also priced a 46% chance of a U.S. rate increase next summer, down from a more than 60% chance on Monday. The yield curve flatted recently on expectations that the Fed will lower interest rates sooner than expected, pushing yields higher on short end. The yield spread between the U.S. 5 - year note and the 30 year bond increase to 92.8 basis points on Tuesday. On Monday the U.S. 5 Year 30 Year yield curve was flattest since late April 2020 in America. The steepening of the curve today is a change of forecast Fed hike expectations, said Ben Jeffery, rates strategist for BMO Capital in New York. The Fed had said it would hike rates after it ends tapering but that runs counter to a June tightening that the market had priced in. We are probably finding a footing at this point, looking at 5 s 30 s between 85 and 100 basis points, he added. U.S. $5 - year yield, which reflects Fed tightening, was on a tear the last two weeks, hitting its highest since February 2020 at 1.193%. The yield was last down at 1.1586%. Analysts said global central banks' dovish comments on Tuesday prompted some of the session's earlier steepening moves. Bank of France Governor Francois Villeroy de Galhau, a member of the European Central Bank's policy-setting Governing Council, said on Tuesday there is no reason for the ECB to increase rates between now and the end of 2022 as eurozone inflation is expected to fall below the 2% target by the ECB. In the minutes of its Oct. Policy Meeting, the Reserve Bank of Australia said earlier that the outbreak of the Delta variant had interrupted the Australian economy's recovery. It reiterated its view of no hike in the 0.1% cash rate until 2024 given sluggish wages and inflation. Aside from persistent Central Bank messages, U.S. housing starts unexpectedly fell in September amid persistent shortages of inputs and labor. U.S. starts dropped 1.6% to a seasonally adjusted annual rate of 1.555 million units last month. The U.S. housing report resumed by briefly on long-dated yields, before it weighed gains. In U.S. exchange today, U.S. 10-year yields were last up nearly six basis points at 1.6407% in afternoon trading. It hit a 4 - 1 2 - month peak of 1.6440%. U.S. 20 year and 30 year yields were last up to one-week highs and rose to 2.0684% and 2.0897%, respectively. The long end hit their peaks after Fed Governor Christopher Waller said the Fed may have to take a more aggressive policy response if inflation continues through the end of the year.