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Treasury yields moved lower Wednesday as investors awaited private-sector jobs data and the release of the minutes from the Federal Reserve’s December policy meeting.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.654%
fell to 1.647%, compared with 1.666% at 3 p.m. Eastern on Tuesday. Yields and debt prices move opposite each other. -
The 2-year Treasury yield
TMUBMUSD02Y,
0.765%
stood at 0.758%, down from 0.764% Tuesday afternoon. -
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
2.056%
was 2.05% versus 2.077% late Tuesday.
What’s driving the market?
Investors were showing some buying interest in Treasurys after a two-day selloff that drove yields on 10- and 30-year maturities to their highest since late October, steepening the yield curve as investors appeared to largely brush aside worries about the spread of the omicron variant of the coronavirus that causes COVID-19.
The runup in yields sparked a sharp selloff in growth-oriented stocks, which are more sensitive to rising rates, with the tech-heavy Nasdaq Composite
COMP,
tumbling more than 1% on Tuesday.
Minutes of the December meeting of the rate-setting Federal Open Market Committee are due at 2 p.m. Eastern. Investors will be sifting through the details of the deliberations, which saw policy makers agree to speed up the wind-down of the central bank’s monthly asset purchases, putting them on track to conclude in March. Investors have increasingly bet that the Fed could begin to lift rates then.
Private-sector payrolls data from ADP is due at 8:15 a.m. Eastern. Economists surveyed by The Wall Street Journal expect a rise of 375,000. The official U.S. jobs report is due Friday, with economists looking for the economy to have added a total 422,000 jobs.
The Markit services purchasing managers index for December is set for release at 9:45 a.m. Eastern.
What are analysts saying?
“With three rate hikes in 2022 now the median forecast of FOMC members the market will also be keen to see if the minutes show that members are anxious to start talking about rate hikes now in order to give the Fed room to hike as soon as tapering is done, or whether the Fed is thinking more in terms of getting the taper done and then prompting the market with suggestions of quick rate increases,” said Steve Barrow, head of G-10 strategy at Standard Bank, in a note.
“The former could keep the market focused on more of the sharp yield rises we have seen so far this year, while the latter might give the Treasury market a bit of breathing space,” he said.
