US Treasury Yields Soar 1.54% Marking Its Highest Point Since June

Major economic yields in the US are on an uptrend today with the 10-Year Treasury Note rising to its highest point since June. The US Treasury Note topped 1.54% this morning amidst a growing indication of persistent inflation in the North American powerhouse. As reported by CNBC, while the 10-year Treasury note rose by 5 basis points as at 4 a.m. ET. Other yields including the 30-year Treasury Bond also printed a 6 basis point increment atop a 2.0625% growth.

The Treasury Notes are a US government debt security with a fixed interest rate and maturity between two and 10 years, while the Treasury Bonds have a maturity date of 20 years and above. These metrics are vital for measuring the health of the economy.

The perceived economic growth in the US is notably being threatened by persistent inflation. Federal Reserve Chairman Jerome Powell in his prepared speech for Congress later today noted that the inflation rate is expected to hang on for a much longer time than anticipated.

“Inflation is elevated and will likely remain so in coming months before moderating,” Powell said. “As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal.”

The Fed has been doing a lot to cushion the impact of the coronavirus pandemic with one of its programs, the asset repurchase helping to keep the broader market afloat. While there seem to be insinuations of a gradual pullback in the asset repurchasing by the Fed, the residual presence of inflation is bound to make the Fed rescind its decision in the near term.

Inflation Driven by the Delta Induced Strain on the Supply Chain

The potential recovery in the economy is currently being stunted by the upward price pressures caused by supply chain bottlenecks amongst other factors. The supply chain bottlenecks are not unconnected to the growing COVID-19 Delta variant that is systematically becoming pervasive on the global front.

The impacts of strains from other major markets are also billed to offset the balance between demand and supply in the United States. For example, Chinese regulators have taken a stance against the utilization of coal as an energy source.

This position has forced the closure of key material manufacturers operating from mainland China. A number of American companies including Apple Inc (NASDAQ: AAPL), and electric automaker, Tesla Inc (NASDAQ: TSLA), whose supplies operate from China are currently strained by the impact of the Chinese crackdown on alleged impure energy sources. These strains have their underlying impact on the US economy no matter how subtle as the supply shortage of key materials like chips billed to boost manufacturing is further compounded.

“We at the Fed will do all we can to support the economy for as long as it takes to complete the recovery,” Powell said.