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Treasury yields rose Thursday as President Joe Biden met with NATO leaders in Brussels to discuss the Russia-Ukraine war, and investors continued to monitor remarks by Federal Reserve officials.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.371%
rose to 2.381%, compared with 2.32% at 3 p.m. Eastern on Wednesday. Yields and debt prices move opposite each other. -
The yield on the 2-year Treasury note
TMUBMUSD02Y,
2.134%
was at 2.151% versus 2.113% on Wednesday afternoon. -
The 30-year Treasury bond yield
TMUBMUSD30Y,
2.551%
rose to 2.564% from 2.52% late Wednesday.
What’s driving the market?
Biden met with leaders of the North Atlantic Treaty Organization, the first of a series of meetings with European allies and other world leaders in response to Russia’s Feb. 24 invasion of Ukraine. Biden and U.S. allies are expected to roll out further rounds of sanctions against Moscow.
Russia’s invasion and the resulting sanctions have helped fuel a surge in commodity prices that have added to inflation worries while also raising concerns about the outlook for economic growth.
Meanwhile, Federal Reserve officials this week have underlined the prospect of raising rates at an even faster clip than signaled after last week’s policy meeting when they delivered an increase of 25 basis points, or a quarter of a percentage point. Fed Chairman Jerome Powell on Monday said the Fed could move rates up by more than a quarter point at future meetings if deemed necessary.
On Wednesday, San Francisco President Mary Daly said “everything is on the table” for the central bank’s May meeting, including a half-point rate rise and an announcement about the plan to shrink the Fed’s nearly $9 trillion balance sheet. Cleveland Fed President Loretta Mester said she wanted the Fed to “front-load” rate hikes in the first half of the year and get the benchmark Fed funds policy rate up to 2.5% by the end of 2022. This projection presumes there will be “some” 50 basis point rate hikes during the year, she said.
Minneapolis Fed President Neel Kashkari was scheduled to speak about the economy this morning, while Fed Gov. Christopher Waller, who has previously spoken in favor of half-point rate increases, is due to speak about housing at 9:10 a.m. Atlanta Fed President Raphael Bostic speaks at 11 a.m.
Weekly data on jobless claims are due at 8:30 a.m. and are expected to show first-time applications for benefits fell to 210,000 in the week ended March 19 from 214,000 the previous week. Data on Feb. durable goods orders are also slated for 8:30 a.m. along with the fourth-quarter current-account deficit.
Markit’s March manufacturing and services purchasing managers index readings are set for 9:45 a.m.
What do analysts say?
“Geopolitics and energy prices should be in focus today with EU, NATO and G-7 summits lined up after Biden already announced intentions to introduce new sanctions during his trip to Europe,” wrote analysts at Commerzbank, in a note.
“While an outright oil embargo against Russia seems to be a rather extreme scenario, especially with Germany still fearing the consequences, markets appear to be getting wary that ‘something’ will happen, judging by highflying oil- and gas prices,” they said.
