Futures Movers: 10- and 30-year Treasury yields hold at 3-week highs

What yields are doing

• The yield on the 2-year Treasury note
  TMUBMUSD02Y,
  4.227%
  declined 5.1 basis points to 4.213% from 4.264% at 3 p.m. Eastern on Tuesday. Yields and debt prices move opposite each other.

• The 10-year Treasury yield
  TMUBMUSD10Y,
  3.673%
  was little changed at 3.684% versus 3.683% late Tuesday afternoon.

• The yield on the 30-year Treasury bond
  TMUBMUSD30Y,
  3.722%
  rose less than 1 basis point to 3.743% from 3.735% late Tuesday.

• Wednesday’s levels were the highest for the 10- and 30-year bonds since Nov. 30, based on 3 p.m. figures from Dow Jones Market Data.

Market drivers

Yields on the 10-year note and 30-year bond were little changed on Wednesday after ending the previous New York session at their highest levels of December, according to Dow Jones Market Data.

Global bond yields got a lift on Tuesday after the Bank of Japan unexpectedly increased the size of the band around the yield on the 10-year Japanese government bond, or JGB, to allow it to trade 50 basis points on either side of 0% versus a previous band of 25 basis points.

BOJ Gov. Haruhiko Kuroda emphasized that the move was meant to improve market functioning and wasn’t a tightening of monetary policy nor a step toward the exit from ultraloose monetary policy. But some investors nevertheless saw the move as a sign that the last remaining anchor on global interest rates could soon give way.

See: Why the Bank of Japan’s surprise policy twist rattled global financial markets

The 10-year Japanese government bond yield
TMBMKJP-10Y,
0.479%
was up by around 6 basis points at 0.47% Wednesday, according to FactSet.

Aggressive tightening of monetary policy by the Federal Reserve and other major central banks has sent U.S. and global bond yields jumping in 2022.

In U.S. economic data released Wednesday, the U.S. consumer confidence index hit an eight-month high, jumping to 108.3 in December from 101.4 previously. Existing home sales fell for the 10th straight month in November, the longest losing streak on record, down by 7.7% to 4.09 million; that’s the lowest since May 2020.

What analysts say

“Treasuries partially recovered from the BoJ inspired selloff,” said Ian Lyngen and Benjamin Jeffery, rates strategists at BMO Capital Markets, in a note.

“Our pressing concern isn’t the impact of overseas yields in 10s and 30s from tighter monetary policy, instead it’s the fallout on the global real economy from the hurried move to restrictive territory and the heretofore unrealized impact of the uniformly hawkish policy bias,” they wrote.