10-Year Hits Multiyear High

10-Year Treasury yield rises to 2.14%- highest since July 2019. Swap rates and Treasury yields moved sharply higher in a day largely devoid of any major news around inflation or the Russian invasion of Ukraine. The head-scratching move may have been partially flow-driven as the market looked to hedge a busy day of corporate bond issuance. The 10-year Treasury yield would climb by 15 basis points to end the day at 2.14%- the highest it’s been in nearly 3 years.

Russia requested military support from China, diplomatic cables show. Officials have said that Russia asked China for five different types of equipment including missiles, drones and armored vehicles. Should China provide any equipment to Russia, it would mark a dramatic change in the geopolitical landscape and would likely result in more sanctions if not the start of a new cold war. Chinese stocks fell dramatically on the day, the Hang Seng declining 5% in the biggest one-day rout since the financial crisis.

FOMC meeting begins tomorrow. The Fed’s two day meeting will end with an expected rate hike announcement on Wednesday. Last week’s CPI figure will do little to dissuade the central bank from hiking rates for the first time in four years, and the market still refuses to rule out a 50bp rate hike. Fed Funds futures are now pricing in 7 rate hikes before the end of the year- one rate hike per FOMC meeting.