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Treasury yields chase oil prices

FXStreet (Mumbai) - The treasury yields in the US have been chasing oil prices since the European session as the sharp moves in the oil prices influence the inflation expectations.

10-year yield completes a lap

The 10-yr treasury yield was up almost 3 basis points (bps) in Europe, but quickly erased gains after oil prices extended losses to trade 3% lower. However, the oil prices recovered part of their losses, which saw the yield rise to trade at 2.174%; up 3bps again.

Meanwhile, the 2-yr yield, which is more sensitive to the short-term interest expectations and inflation expectations, witnessed similar moves and now trades 4bps higher at 0.935%.

The yields may harden as we head closer to Wednesday’s Fed rate decision, but weaker oil prices may play spoil sport.

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