U.S. Sees Selloff Amid Hawkish Fed Commentary and UK PM Truss’ Resignation

Hawkish Fed sparks Treasury selloff. Treasury yields climbed across a steepening curve today, the 2-year yield increasing ~6 bps to 4.61% and the 10-year yield increasing ~10 bps to 4.23%. Philadelphia Fed President Patrick Harker (hawkish non-voter) fueled the selloff after he said that the central bank will probably raise rates to “well above” 4% this year, citing a “disappointing lack of progress on curtailing inflation” as the catalyst. Lisa Cook added to this sentiment, saying that rates will need to keep rising in order to curtail inflation. 2008’s 10-year yield high of 4.274% is well within sight, with today’s yield only ~4 bps away.  

UK political turmoil continues as the country is set to select a new prime minister. Global markets have been heavily impacted by UK political developments, as the recently elected Prime Minister Liz Truss and her administration are now on the way out after pushing major fiscal policy overhauls during their first few weeks. With luck, the changes should spur a return to stability for the currency and Gilt market.

Day ahead. September personal income and spending data will be released at 8:30 AM ET. October’s Michigan final consumer sentiment will follow at 10:00 AM ET.