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A Treasury selloff resumed on Monday, briefly pushing the 10-year yield above 3.2% as investors awaited another round of inflation data this week.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.175%
was at 3.188% after trading above 3.20% at its session high, according to FactSet. The yield was at 3.124% at 3 p.m. Eastern on Friday, its highest since Nov. 3, 2018. Yields and debt prices move opposite each other. -
The 2-year Treasury yield
TMUBMUSD02Y,
2.688%
was 2.709%, up from 2.696% Friday afternoon. -
The 30-year Treasury bond yield
TMUBMUSD30Y,
3.284%
jumped to 3.292%, up from 3.22% late Friday.
What’s driving the market?
A Treasury selloff has driven up yields sharply in 2022 as investors reacted to inflation running at its hottest in more than four decades and as the Federal Reserve ramps up its efforts to cool price pressures. The Fed last week delivered a an increase of 50 basis points, or half a percentage point, to the fed funds rate. It’s the largest since 2000. The Fed also signaled two more half-point hikes were on the table for coming meetings.
Stock-index futures pointed to steep losses for U.S. equities. A sharp rise in yields is a negative for stocks, particularly tech and other growth shares whose valuations are based on profit and cash flow far into the future. Rising yields on risk-free Treasurys undercut the present value of those future flows.
The focus this week is on inflation data and any signs of a slowing in price pressures, with the April consumer price index due Wednesday morning.
What analysts are saying?
“Bond yields have continued to climb and that’s despite the fact that riskier assets, such as equities, have been on the slide. Some time ago we might have expected weakness in risk assets to lower government bond yields but surging inflation has clearly destroyed this relationship, at least for now,” said Steve Barrow, head of G-10 strategy at Standard Bank, in a note.
“The bottom line, in our view, is that bond prices and equity values spent many years rising in tandem and now they are falling together and look set to do so for some time,” he wrote.
