US bond market pricing of three to four additional rate increases is too aggressive and could push policy past what the economy needs, according to news.einfomax.co.kr. The Korean financial outlet reported Friday that the scale of tightening currently reflected in Treasury yields carries what it described as an overshoot risk.
The report was published as part of a roundup of market coverage on US fixed income and equities. Related items in that roundup noted that US Treasury yields have entered a "5% era," and that New York stocks closed broadly higher as government bond yields declined.
The claim rests on the gap between what the bond market has already discounted and what the outlet argues is justified. If yields are factoring in three to four hikes, any smaller move by policymakers would leave those yields looking too high relative to the actual path of policy — the overshoot the report points to.
The surrounding coverage offers a mixed picture. One report focused on which equities are still performing well despite elevated Treasury yields, while another framed the near-term direction of October markets as hinging on a single upcoming event. A separate item attributed a 4% jump in Brent crude to the addition of a US aircraft carrier in the Middle East.
What to watch next: whether incoming US economic data and Federal Reserve commentary validate the market's current rate expectations or force a repricing of Treasury yields.
