Fed Vice Chairman Richard Clarida's remarks in the morning brought new clues to the market. He said he supports waiting until 2023 to raise interest rates. After this statement, market participants found that there was no reason to buy Treasuries while they were low, as investors planned to wait for the bonds to fall a little bit before they were issued next week before the $126 billion interest-bearing bonds were issued.
Traders said Clarida's comments were not as hawkish as Fed governor Christopher Waller, but not as dovish as investors had expected. Money market expectations of an interest rate hike in 2023 have risen rapidly. Clarida said that the conditions for raising interest rates are expected by the end of 2022 and that there are upward risks to inflation and that the Fed will assess the progress made by the economy towards achieving the downside conditions at future meetings.
Treasury yields have risen sharply and the yield curve has steepened, according to brokers. The 10-year yield above 1.2% has generated a small amount of buying demand, but it is far less than the short-term sell-off of five-year and 10-year contracts.