Short Term Rates On The Rise – Fixed Income Update

Rates continued on a gradual ascent in October, with the 10-year Treasury bond yield ending the month at 1.55%, up from 0.88% this same time last year.

The Federal Reserve is scheduled to slow its pace of buying Treasury and mortgage-backed bonds in November. It is still uncertain as to how this might affect interest rates and the bond markets.

The yield on the 2-year Treasury bond rose abruptly to 0.48% at the end of October, up from 0.28% on September 30th. The rapid increase in short-term rates is an indicator to bond analysts that the Fed is readying to increase rates. Short-term rates are primarily dictated by the Federal Reserve while longer-term rates are dictated by the markets.

Sources: Treasury Dept., Federal Reserve

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