US 10-year Treasury yield ends week at 5.00% after Oct 22 rally

Treasury yields fell back from their early-October highs

The Federal Reserve's H.15 release of selected interest rates covers data through Oct 23. On Oct 22 the 2-year Treasury yield fell 16 basis points (bp, hundredths of a percentage point), from 4.81% to 4.65%. The 10-year yield fell 17bp, from 5.13% to 4.96%. Both rose slightly on Friday to end at 4.69% and 5.00%. The 10-year weekly average was 5.07%, down from 5.15% the week before and 5.26% two weeks before. The 30-year yield is at 5.33%, down from 5.60% on Oct 9.

Lower real yields drove most of the drop

The 10-year inflation-indexed yield, which strips out inflation, went from 2.80% to 2.66% over the week. The 10-year breakeven rate barely moved, at about 2.34%. The breakeven is the gap between regular and inflation-indexed yields, and it signals expected inflation.

Short-term yields still point to rate hikes

The 3-month yield (4.22%) and the 1-month yield (4.11%) sit well above the federal funds effective rate. That rate is the average banks charge each other for overnight loans, and it has held at 3.88%. The primary credit rate, which the Federal Reserve charges banks for short-term loans, is 4.00%.

The dollar was flat while Asian currencies firmed

The Federal Reserve's H.10 release of exchange rates shows the broad dollar index flat on the week at 121.32. This index measures the dollar against the currencies of US trading partners. It is below its Oct 14 peak of 122.00. The dollar index against emerging markets edged up to 130.21.

• Indian rupee: 94.94 per dollar. It is still holding the gain that followed the Reserve Bank of India's Oct 12 measures, a move from 96.73 to 95.28 on Oct 13, or about 1.5% stronger. It touched 94.46 on Oct 21.
• Japanese yen: firmed from 158.49 to 156.87 per dollar as investors moved into haven assets.
• Korean won: strengthened from 1,343.31 (Oct 15) to 1,325.06.
• Chinese yuan: 6.6702, after firming steadily from 6.7038 at the start of the month.