According to Zhitong Finance APP, the latest monthly auction of 10-year government bonds by the USA government was completed at the highest yield of 4.68% since 2007, benefiting from recent economic data suggesting a lower likelihood of further interest rate cuts by the Federal Reserve before mid-year.

The scale of this auction was $39 billion, with the yield slightly higher than the market expectations at 1 PM New York time (the bidding deadline). After stronger-than-expected services activity and job vacancy data, yields on bonds of all maturities rose by several basis points.

Tracy Chen, a portfolio manager at Brandywine Global Investment Management, stated that this data "reinforces the market's view of the strong USA economy and that interest rates did not impose significant constraints on the economy."

Previously, traders were fully betting that the Federal Reserve would cut rates again before March of next year, whereas it has now been pushed back to possibly this second half of the year.

Before the employment data for December, which will be released on Friday, the November JOLTS job vacancies unexpectedly increased, and the December ISM services index also exceeded expectations. Among them, the indicators related to corporate payment prices even surged to the highest level since 2023.

Michael Cloherty, head of USA interest rate strategy at UBS Group, pointed out: "The market's concerns about elevated inflation risks remain, increasing the term premium. In addition, there are concerns about the financing needs of budget deficits, as well as from last year's economic.hard landingThe anticipated shift.possibility of a soft landing,Even the changes without a landing have influenced the trend of interest rates.

Despite the 10-year Treasury yield approaching 5% by the end of 2023, the auction results set a record for the highest yield on newly issued 10-year Treasuries since August 2007. For a period after the COVID-19 pandemic, the auction yield for 10-year Treasuries was even below 1% multiple times. It is expected that Wednesday's 30-year Treasury auction may also set the highest yield since 2007.

The yield on 10-year Treasuries has risen from less than 4.2% a month ago to the current level, reflecting signs of economic resilience and sticky inflation while also driven by increased financing demand following three interest rate cuts last year. This trend is consistent with global markets, for example, the yield on the United Kingdom's 30-year Treasuries rose to its highest level since 1998 on Tuesday.

The increase in the issuance of 10-year Treasuries has resulted in a rise in the number of bonds issued in November with a coupon rate of 4.25%. Currently, the highest coupon rate for 10-year Treasuries is 4.5%. However, the results of this auction indicate that the newly issued 10-year Treasuries in February are expected to potentially establish the highest fixed interest rate in nearly 20 years.