10-Year Treasury Yields May Be Stuck In A Range But The LIBOR Interest Rate Benchmark Keeps Climbing Steadily Higher

Ahead of tomorrow’s interest rate announcement from the Federal Reserve, 10-year Treasury yields remain stuck just below 2.90%. The bond market just can’t seem to admit that the Fed might raise interest rates three times in 2018–let alone a potential four times–although I think it is gradually working its way toward that consensus.

Meanwhile, though, the three-month U.S. dollar London interbank offered rate, or LIBOR, one of the benchmarks for setting borrowing rates worldwide, has been climbing steadily since February 7, and has now climbed for 30 straight days. The rate has reached 2.25%, the highest since 2008. Meanwhile, its gap over similar-maturity risk-free rates, known as the Libor-OIS spread, has more than doubled since the end of January to 55 basis points, a level unseen since 2009.

Global markets, without the distraction of the debate over the safe-haven status of U.S. Treasuries, is pricing in higher interest rates than the domestic bond market is.

The yield on the 10-year Treasury climbed to 2.88% today, up two basis points.

The Dow Jones Industrial Average was up 0.47% as of 2:15 p.m. New York time. The Standard & Poor’s 500 was ahead 0.12%. The NASDAQ Composite had climbed 0.19%.

Oil was rallying, strongly, with the U.S. benchmark West Texas Intermediate ahead 2.11% to $63.37 a barrel. The international benchmark Brent was ahead 1.94% to $67.33 a barrel. Gold had dipped 0.45% to $1311.90 an ounce.