• December 9, 2023

U.S. Treasury yields climb ahead of jobless claims, durable goods

US Treasury bond yields were higher early Thursday after 10-year Treasury bond yields rose for the first time in five sessions on Wednesday and the long bond extended its yield spurt for a fifth straight day.

Fixed income investors are waiting for a range of data, including a weekly update of unemployment benefit entitlements, a reading of orders for durable goods in April, an update of gross domestic product in the first quarter, and a reading of pending home sales in April.

The data is ahead of a key move for bond investors, April Personal Consumption Spending due Friday, and May jobs report due the following Friday in a week of truncated memorial days.

How Treasurys Are Performing
  • The 10 year treasury note
    TMUBMUSD10Y, 1.613%
    was 1.592%, up 2 basis points from 3:00 p.m. Eastern Time on Wednesday.

  • The 30-year state treasury
    TMUBMUSD30Y, 2.295%,
    known as the long bond, it returned 2.276%, up 1.8 basis points.

  • The 2 year treasury note
    TMUBMUSD10Y, 1.613%
    The rate was 0.148% versus 0.147% a day ago.

On WednesdayThe 10-year Treasury note saw a four-day yield spurt while the 30-day rate cut extended its rate decline for a fifth straight session, which had been at its lowest point since May 6.

Market drivers for fixed income securities

After a steady buy range that had brought yields to roughly three-week lows, bond yields are slowly rising again, but trading in a relatively narrow range.

Federal Reserve members must insist that they focus on getting maximum employment before withdrawing support from the market, including a $ 120 billion monthly asset purchase program.

Still, market participants are starting to bet that the Fed may be signaling more clearly that it is ready to scale back its market support bond purchases in August or September.

On Wednesday, Randal Quarles, the Fed’s vice chairman of oversight, said it was soon time for Fed officials to begin Debate on the slowdown in central bank bond purchasesif the economy continues to improve at its current pace. Federal Reserve Vice Chairman Richard Clarida also said Tuesday that US Federal Reserve officials could potentially start discussing the issue reasonable time to reduce bond purchases Program for upcoming political meetings,

This week, however, the focus for investors may be less on this week’s economic reports and more on next week’s May job report after a disappointing April job report that took the 10-year return to around 1.48%.

In the near future, investors will be on the lookout for any signs of what May’s job report might show in Thursday’s weekly jobless claim stats. Economists polled by the Dow Jones estimate that 425,000 Americans applied for unemployment benefits in the week ending May 22nd. The week before, unemployment claims hit a new low in the pandemic of 444,000.

Regardless, investors are waiting for an auction of 7-year US Treasury bills worth $ 62 billion
TMUBMUSD10Y, 1.613%
This is viewed closely as a measure of appetite and its impact on the broader bond market. The 7-year note showed a return of 1.258% versus 1.230% on Thursday morning.

What do strategists say?

“I expected the 10 years to continue climbing towards 2%, but I’m starting to doubt myself. If not, it suggests this next economic cycle will be weaker than the last – right now we are at the lows of the last cycle (as measured by 10-year returns), ”said Crit Thomas, global market strategist at mutual fund firm Touchstone Investments informed MarketWatch via email.

“It’s hard to swallow, but it would be in line with the trend we’ve seen over the past few cycles (and what we’ve seen in Japan and Europe). It would also suggest that all of these massive monetary and fiscal stimuli have done nothing for the longer-term prospects of our economy, ”the analyst said.

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