As the federal government took a breather from the crisis of shutdown (temporary business suspension), U.S. Treasury bond yields soared.
According to foreign media such as Reuters on the 2nd, the yield on 10-year maturity U.S. Treasury bonds rose to 4.703% at one point on the day and closed at 4.683%.
The intraday rate of 4.703% is the highest since 2007.
As the shutdown crisis was averted, demand for U.S. Treasury bonds, a safe asset, decreased and Treasury yields rose.
The U.S. Congress passed a 45-day temporary budget to avoid a shutdown on the 30th of last month, which was the deadline for processing next year’s budget.
Stronger-than-expected U.S. economic indicators also pushed up government bond yields.
The September manufacturing purchasing managers’ index (PMI) compiled by the Institute for Supply Management (ISM) was 49.0, exceeding the market expectation of 47.7.
The fact that high-ranking officials of the Federal Reserve, including Chairman Jerome Powell, Vice Chairman Michael Barr, and Federal Reserve Board member Michelle Bowman, have successively emphasized curbing inflation has also had an impact on the decline in government bond prices (increasing yields).
There are also predictions that U.S. long-term government bond interest rates will rise further and exceed 5%.
Bill Ackman, chairman of Pershing Square Capital, a giant in the hedge fund industry, predicted in an interview with CNBC that day, “The interest rate on 30-year government bonds will be in the mid-5% range, and the interest rate on 10-year bonds will be close to 5%.”