SINGAPORE, March 2 (Reuters) - U.S. Treasury yields hit
fresh highs in Asia trade on Thursday, as a series of nasty
inflation surprises around the world spooked investors and
stoked worry about interest rate hikes.
The two-year Treasury yield , which typically
moves in step with near-term U.S. rate expectations, rose nearly
four basis points to a more than 15-year high of 4.9244%.
The benchmark 10-year yield peaked at 4.02%, its
highest since November, after having broken the psychological 4%
level in the previous session, as traders ramped up their bets
on rates rising further and staying there longer than hoped.
While the Institute for Supply Management survey out on
Wednesday showed a contraction in U.S. manufacturing for a
fourth straight month in February, the data also pointed to an
increase in prices for raw materials - a negative signal for
inflation.
"The expansionary reading on prices paid demonstrates the
downdraft from goods prices on consumer price inflation will not
be everlasting," said economists at Wells Fargo. Five year
yields hit a nearly four-month high of 4.3053%.
U.S. Treasuries were also hit by the spillover effect from
Europe, where surprisingly strong German inflation data followed
similarly hot readings in Spain and France. Euro zone inflation
data is due later on Thursday.
Germany's 2-year government bond yield rose to
its highest level since October 2008.
"More persistent inflationary pressures in the U.S. and
Europe, which could be exacerbated by China's post-reopening
recovery ... could make the challenge of taming inflation," said
analysts at Goldman Sachs.
(Reporting by Rae Wee
Editing by Shri Navaratnam)
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