The auction results for the U.S. 10-year Treasury bonds were poor, with yields reaching the highest level since 2007

According to the Zhitong Finance APP, the latest monthly auction of the U.S. government's 10-year Treasury bonds was completed at the highest yield of 4.68% since 2007, thanks to recent economic data indicating a reduced likelihood of further interest rate cuts by the Federal Reserve before mid-year. The auction size was $39 billion, with the yield slightly above market expectations at 1 PM New York time (the bid deadline). Following stronger-than-expected data on service sector activity and job vacancies, yields on Treasury bonds of all maturities rose by several basis points. Tracy Chen, a portfolio manager at Brandywine Global Investment Management, stated that this data "reinforces the market's view of a strong U.S. economy and that interest rates are not significantly constraining the economy." Previously, traders had fully bet that the Federal Reserve would cut rates again before March next year, but this has now been pushed back to the second half of this year. Ahead of the December employment data set to be released on Friday, November's JOLTS job openings unexpectedly increased, and the December ISM services index also exceeded expectations. Notably, the indicator related to corporate payment prices surged to its highest level since 2023. Michael Cloherty, head of U.S. interest rate strategy at UBS Securities, pointed out that "concerns about persistent inflation risks remain high, which increases term premiums. Additionally, worries about the financing needs of the budget deficit, along with a shift from expectations of a hard landing for the economy last year to a soft landing or even no landing, have also influenced interest rate trends." Despite the 10-year Treasury yield nearing 5% by the end of 2023, the auction results set a new high yield for newly issued 10-year Treasury bonds since August 2007. For a period after the COVID-19 pandemic, the auction yield for 10-year Treasury bonds even fell below 1% multiple times. The upcoming 30-year Treasury bond auction on Wednesday is also expected to set the highest yield since 2007. The yield on the 10-year Treasury bond has risen from less than 4.2% a month ago to the current level, reflecting signs of economic resilience and inflation stickiness, while also being driven by increased financing demand following three interest rate cuts last year. This trend is consistent with global markets, as the yield on the UK 30-year Treasury bond rose to its highest level since 1998 on Tuesday. The increase in the issuance of 10-year Treasury bonds has raised the number of bonds issued in November with a coupon rate of 4.25%. Currently, the highest coupon rate for 10-year Treasury bonds is 4.5%. However, the auction results indicate that the new 10-year Treasury bonds expected to be issued in February may set the highest fixed rate in nearly 20 years