US yields rise as FedEx warning adds to high rate expectations

By: News Team

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Two-year Treasuries rose on Friday after a warning from FedEx Corp (NYSE:FDX). on a slowdown in global demand added to the growing perception that the Federal Reserve is going to keep interest rates higher for longer to curb inflation. 

* The yield on the two-year US Treasury note, a gauge of interest rate expectations, topped 3.9%. The smaller rise in the benchmark 10-year note caused the yield curve inversion - seen as a harbinger of recession - to widen further. 

* The broader macroeconomic backdrop in the United States and the world is worsening while the dollar is strengthening, which together support the view that the Fed will win the battle against inflation, said Steven Ricchiuto, chief US economist. United in Mizuho (TYO:8411) Securities USA. 

* "The Fed is going to be successful on inflation because it's going to keep tightening monetary policy and probably keep it around longer," Ricchiuto said. "Higher for longer, that's really what's driving the behavior in the market." 

* FedEx's warning after the close of trading on Thursday "set the stage for people to be forced to assume what they have resisted assuming all along: that rates will be higher for longer," he said. 

* FedEx withdrew financial forecasts it issued just three months ago, saying the slowdown in global demand was strongest in late August and would worsen in the November quarter. 

* The two-year yield was up 3.2 basis points at 3.905%, and the 10-year yield was up 1.8 basis points at 3.477%. 

* The gap between the two widened to -43.2 basis points. * The 30-year bond yield added 4.8 basis points to 3.528%

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