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Real Yields Supported By Further Increase In Hike Expectations

US TSYS
  • With 262bp of Fed hikes priced to year-end, expectations are off earlier highs of 265bp shortly after ISM services showed a record high price component but are nevertheless up solidly on the day.
  • This has helped maintain 10Y real yields close to recent highs at 16bps (+2bps) whilst the breakeven is trimmed marginally to 2.81% (-1.5bps), the lowest since mid-April.

US 10Y nominal yield (white), breakeven (yellow) and real yield (green)Source: Bloomberg

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