Treasuries lost earlier ground, mirroring European bonds that are weakening ahead of Thursday’s European Central Bank policy decision.
U.S. 10-year yields were little changed at 2.69% as of 6:41 a.m. in New York, erasing an earlier advance to as high as 2.71%. Euro-area core and periphery bonds slid, with benchmark German yields climbing for the first time in three days. Economists expect the ECB to maintain its speedier withdrawal of stimulus, even with policy makers seen as likely to hold off from major decisions.
Money markets are wagering on eight quarter-point rate hikes across the next six Federal Reserve meetings to year-end, while two such increases are priced in for the ECB before December.
“Central bank rate hike bets in some countries have become so extreme,” said Andrew Ticehurst, strategist at Nomura Holdings Inc. in Sydney. “That we’re moving to tightening has given market participants confidence and clarity on what the hiking cycle would look like.”
Bonds rallied earlier in Asia, where Singapore’s central bank tightened monetary policy while the Bank of Korea also hiked rates. Those decisions followed jumbo-sized rate increases from central banks in Canada and New Zealand on Wednesday.
The chorus of rate increases may be helping to spur a re-evaluation of aggressive bets from the U.S. to Australia which turbocharged global bond yields to multi-year highs this week. Profit taking on shorter duration bonds is also fueling gains ahead of the Easter long weekend.
--With assistance from James Hirai.
This article was provided by Bloomberg News.