U.S. Treasury yields rose on early Thursday’s trade as global bond markets were on the backfoot in expectation of the reopening of their economies later this year.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.461% rose 6.4 basis points to 1.451%, on track to hit the key level of 1.50%, while the 2-year note rate TMUBMUSD02Y, 0.152% was up 1.6 basis points to 0.143%. The 30-year bond yield TMUBMUSD30Y, 2.309% gained 6.3 basis points to 2.305%. Bond prices move inversely to yields.
What’s driving Treasurys?
Australian, New Zealand, and European government bonds were weakening on Thursday, with some of the bearish pressure spilling over into the U.S. Treasury bond market. The rise in long-term rates could have the potential to undo the easy lending conditions fostered by central banks, raising questions whether monetary policy makers will lean against the selloff.
The 10-year German government bond yield TMBMKDE-10Y, -0.246% was up 4.4 basis points to negative 0.25%, while the 10-year Australian bond rate TMBMKAU-10Y, 1.743% shot up 12 basis points higher to around 1.73%.
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Senior Federal Reserve officials will have the opportunity to speak about the rise in long-term bond yields, with Fed Vice Chairman Richard Quarles, Atlanta Fed President Raphael Bostic and New York Fed President John Williams set to make remarks.
Fed Chairman Jerome Powell said this week higher bond rates reflected the improving economic prospects, suggesting further action from the Fed may not be forthcoming.
Investors will face a parade of economic data. Durable goods for January, an updated reading of fourth-quarter gross domestic product and initial jobless claims are all due at 8:30 a.m. ET, followed by last month’s reading of pending home sales.
And the Treasury Department will wrap-up this week’s auctions with its sale of $62 billion 7-year notes in the afternoon.
What did market participants say?
“Uncertainty regarding the future path of rates as the market mulls the post-virus outlook could be informing this rise” in Treasury yields, said analysts at Rabobank.
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