US 10-year Treasury yield hit 2-month low

The yield on the US 10-year Treasury note hit a 2-month low of 2.169% as Yellen’s silence on the monetary policy outlook on Friday was read as dovish sign. 

Currently, the yield trades around 2.17%. The curve between the US 10-year yield and the 2-year yield currently stands at 83 basis points. The drop in the long duration yields nd the flattening of the yield curve is USD bearish and vice versa. 

Focus on debt ceiling

U.S. Treasury Secretary Steven Mnuchin said he was “100 percent confident” that the debt ceiling would be raised in September. However, Republicans stand dividend on the fiscal issue and are once again likely to test Trump’s legislative ability. 

Action is needed to raise the debt ceiling by Sept. 29, although some say the deadline is in mid-October. Failure to get things done by then could lead to US government shutdown and send shockwaves across the global financial markets.