Bond Report: 10-year Treasury yield extends rise to nearly 7-year high

Treasurys saw renewed selling pressure Wednesday afternoon, allowing the yield on the benchmark 10-year note to extend a rise that a day earlier took it to its highest level since 2011.

How are Treasurys performing?

The 10-year Treasury note yield TMUBMUSD10Y, +0.69% rose 1.1 basis points to 3.093%, a day after registering the largest single-day climb since March 1, according to WSJ Market Data Group. That left the yield at its highest level since July 7, 2011. Yields and debt prices move in opposite directions.

Cullen Roche: You shouldn’t fear bonds just because yields are rising

The 30-year bond yield TMUBMUSD30Y, +0.47% edged up 0.4 basis points to 3.214%, after the long bond marked its largest daily yield climb since Feb. 2 in the previous session. The short-dated two-year note yield TMUBMUSD02Y, +0.17% , meanwhile, erased an earlier decline to eke out a rise of 0.4 basis points to 2.589%.

The yield curve, as measured by the spread between the two- and 10-year yields, continued to reverse some of its recent flattening. A flattening curve can be read as a sign of concern about future economic growth, though it is an outright inversion of the curve — with short-dated yields moving above long-dated yields — that serves as a reliable recession warning sign.

What’s driving the market?

Investors watched events in Asia, with North Korea’s threat to pull out of a summit planned for next month with the U.S. sparking worries that a brief detente between Pyongyang and Washington may be near an end.

Read: North Korea threatens to call off U.S. summit if Washington insists on denuclearization

Italian government bond yields jumped after a report said antiestablishment parties in talks to form a government would ask the European Central Bank to write off 250 billion euros ($296 billion) in debt and seek to renegotiate Rome’s contribution to the European Union budget.

Read: Italian bonds show euro ‘exit’ fears still rumble below the surface

What are strategists saying?

“The U.S. 10-year yield [temporarily] rose above 3.07% key resistance, but the test is ongoing,” wrote analysts at KBC Bank, in a Wednesday note. “The same goes for the test of 3.22% in the 30-year yield.”

“Treasury yields broke out above late-April highs yesterday, and as seen in monthly charts below, this had even bigger implications for the longer-term trend channel. No countertrend evidence of exhaustion was present, so near-term yield pullbacks would represent a chance to sell Treasurys, expecting higher yields into late May/early June before any peak,” wrote Mark Newton, technical analyst at Newton Advisors in a Wednesday research note.

What data and Fed speakers are in focus?

Construction on new houses in the U.S. fell 3.7% in April, with the annual rate falling to 1.29 million homes, in line with forecasts.

The Federal Reserve said industrial production rose 0.7% in April, slightly stronger than Wall Street expectations for a 0.6% rise. A mix of revisions to the previous two months were net negative but still saw output grow at a 2.3% rate in the first quarter.

Check out: MarketWatch’s Economic Calendar

What are other assets doing?

The yield on the 10-year Italian government bond TMBMKIT-10Y, +8.58% jumped 16.2 basis points to 2.113%.

The 10-year German bond yield TMBMKDE-10Y, -6.57% fell 4.65 basis points to 0.602%. The German bond, or bund, is viewed as the eurozone’s risk-free security.

Filed in: Top News Tags: 

You might like:

Why real-estate investors should steer clear of Turkey Why real-estate investors should steer clear of Turkey
NewsWatch: Meet the tech-savvy upstarts who think they can finally give Realtors a run for their money NewsWatch: Meet the tech-savvy upstarts who think they can finally give Realtors a run for their money
The Wall Street Journal: Trump slams social-media companies for ‘censorship’ of the right The Wall Street Journal: Trump slams social-media companies for ‘censorship’ of the right
Economic Preview: Sky is clear for sunny U.S. economy, but clouds are forming Economic Preview: Sky is clear for sunny U.S. economy, but clouds are forming
NewsWatch: The questions every investor should ask about Trump’s proposal to radically change how companies report earnings NewsWatch: The questions every investor should ask about Trump’s proposal to radically change how companies report earnings
Saving in a 401(k) for the first time? Here’s what you need to know Saving in a 401(k) for the first time? Here’s what you need to know
The Wall Street Journal: Kofi Annan, former UN secretary general, dies at 80 The Wall Street Journal: Kofi Annan, former UN secretary general, dies at 80
What you probably don’t know about Social Security What you probably don’t know about Social Security

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.