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  • The US 10-year yield rose by 17 basis points in August. 
  • A bigger rise looks unlikely with the Fed adopting a more flexible inflation policy. 

The yield on the US 10-year treasury note increased by 17 basis points from 0.53% to 0.70% in August. That is the biggest monthly gain since September 2018, when the yield rose by 20 basis points. 

As represented by the spread between the ten- and two-year yields, the curve steepened by 14 basis points to 0.57%. 

Yields rose despite dovish expectations from the US Federal Reserve. While speaking at the annual Jackson Hole Symposium last week, the central bank chief Jerome Powell said the Fed will now allow inflation to rise above the 2% target for some time before raising interest rates. 

In other words, the monetary policy is likely to stay accommodative for a prolonged period. As such, yields are unlikely to chart a big bounce in the near-term. 

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