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Treasury yields hint at an early interest rate hike in the US

FXStreet (Mumbai) - The Treasury yields across the short end and the long end of the bond market curve in the US shot higher, indicating the bond traders are pricing-in an early interest rate hike in the US after the Federal Reserve (Fed) policy acknowledged the solid gains in the employment figures.

The two-year note yield, which mimics the short-term interest rate expectations, rose 9 basis points yesterday, its biggest increase in 3 ½ years. Moreover, the interest rate futures data shows the probability that Fed will boost its rate target by Oct 2015 has increased to 76%, compared to 66% prior to the Fed statement yesterday.

The two-year yield is trading at 0.489%, little changed from the yesterday’s New York closing level of 0.493%. Meanwhile, the ten-year treasury yield is trading at 2.321%, up from the yesterday’s New York closing level of 2.308%.

Two-year Yield Technical level

The yield has an immediate resistance at 0.512%, above which it can rise to 0.547%. On the flip side, support is seen at 0.472%.

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