US 10-year Treasury yield falls from 1.60% amid risk-off sentiment in the financial markets

• US 10-year T-bond yields fall to 1.582%, amid risk-off market mood.
• JP Morgan expects a 0.25% rate hike by Q3 of 2022.

The US 10-year benchmark note falls 0.57% as the New York session begins, down two basis points sitting at 1.582% at press time. In the overnight session, US bond yields remained subdued, meandering around 1.60%. However, sudden changes in the market mood spurred a fall towards 1.573%, while some US equity indices fell between 0.14% and 0.52%.

The US 2-year T-bond yield gains one basis point, up to 0.504%, while the 20s and 30s follow the 10-year footsteps falling two and a half and one basis point respectively, sitting at 2.01% and 1.98%, each.

US Initial Jobless Claims extend its fall, showing the resilience of the US labor market

On the macroeconomic front, the US Bureau of Labor Statistics (BLS) reported that Initial Jobless Claims for the week ending on November 13 came at 268K, 8K higher than foreseen, though 1K lower than the previous week, which was revised up to 269K. That seemed to cause no reaction in yields and remained unchanged throughout the announcement. 

Further, at the time of writing, New York Fed President John Williams crossed the wires. He said that we are seeing broader-based increases in inflation, per Reuters. Further stated that we see a pick-up in underlying inflation in the US.

Despite the fall in yields, investors seem convinced that the Federal Reserve would need to pull the trigger to tackle inflation, hiking rates rather sooner than later, in line with market expectations. 

JP Morgan expects the Fed to raise rates by 25 basis points at the beginning of the Q3, a conservative call compared to Deutsche Bank, which anticipates the first hike in July 2022. They added that they expect a 25 basis point hike in each quarter until real yields reach zero. On Thursday, ten-year real yields were at -1.12%.

Looking ahead, bond traders would keep an eye for more Fed speakers in the day. Chicago Fed's President Charles Evans will cross the wires at 19:00 GMT