Interest rates on US government bonds rose on Wednesday as investors followed news affecting the interest rate decision and speculated on the next chairman of the country’s central bank, the Fed.
The country’s ten-year interest rate rose back above the line after temporarily falling below the four percent mark in the morning. The ten-year interest was 4.021 percent with an increase of 2.5 percentage points.
The five- and 30-year interest rates also rose by 2–3 percentage points.
Recently, the markets have been thinking hard about who will be the next chairman of the Fed.
President Donald Trump’s allies and advisers believe, according to the news agency Bloomberg, that the head of the White House’s National Economic Council Kevin Hassett is the strongest candidate. Hassett is seen to be in line with Trump’s views favoring lower interest rates.
Finance minister Scott Bessant told CNBC on Tuesday that there is a “very high probability” that Trump will announce the next chairman of the central bank by Christmas.
Currently serves as chairman Jerome Powellwhich has drifted into disagreements with Trump.
The market is currently pricing in an almost 85 percent probability of a 0.25 percentage point Fed rate cut in December.
Britain gets giant tax increases
British Chancellor of the Exchequer Rachel Reeves presented a sweeping budget on Wednesday that will increase the country’s total tax by 26 billion pounds, or 30 billion euros, and increase the total tax burden to a record 38 percent of GDP by the end of the parliamentary term. The forecast is based on an estimate by the economic authority that was accidentally published before Reeves’ speech.
In the interest rate market, the ten-year British government bond rate was close to 3.9 percent, a drop of about three percentage points. On the foreign exchange market, the pound strengthened by 0.2 percent against the dollar after the news.
The dollar continued to edge lower against the euro on Wednesday after falling 0.5 percent against the currency on Tuesday.
The dollar exchange rate reacted to economic data published on Tuesday, according to which US retail sales grew less than expected in September.
On Wednesday, it was announced that the number of new claims for unemployment benefits in the United States was 216,000, which was less than had been anticipated.
In Japan, the yen continued to weaken and representatives of the country’s administration have said that they are worried about the current development. According to Reuters sources, the Bank of Japan may raise the key interest rate as early as next month, which is believed to strengthen the yen.
At 15:50, one euro fetched 1.156 dollars, 181.03 yen, 0.8759 pounds and 11.021 Swedish kronor. One dollar gave 0.8654 euros and 156.66 yen.