Treasury yields dropped back toward those on German and Japanese notes as Barclays Plc said the Federal Reserve seems to have accepted it can’t raise short-term rates when global peers are easing.
The premium 10-year yields offer over comparable notes in Germany and Japan declined to the lowest in a week after the Fed signaled it will be slower to raise benchmark rates that earlier expected. Negative rates and asset-purchase programs in the euro-area and Japan have suppressed yields there, while policy makers from New Zealand to China and Norway are easing borrowing costs to boost economic activity.
The Fed “appears to be acknowledging that there is a limit to monetary policy divergence and it cannot go it alone in raising short rates when other central banks are easing policy,” New York-based strategists at Barclays including Rajiv Setia wrote in a research report. “A shallower rate path is now seen as more consistent with the global backdrop.”
Benchmark 10-year note yields were little changed at 1.9 percent as of 9:33 a.m. in Tokyo and has dropped nine basis points this week. The 1.625 percent security due in February 2026 was at 97 17/32.
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