Treasury yields finished higher on Thursday after another strong government auction, with traders now looking ahead to Friday’s revisions to the consumer-price index.
What happened
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
rose 3.4 basis points to 4.454%, from 4.420% on Wednesday. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
jumped 7.3 basis points to 4.169% after factoring in new-issue levels. Thursday’s level is the highest since Jan. 24, based on 3 p.m. Eastern time figures from Dow Jones Market Data. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
climbed 6.7 basis points to 4.376%, from 4.309% on Wednesday. Thursday’s level is the highest since Jan. 26. - All three yields have now finished higher in four of the past five trading sessions.
What drove markets
Treasury’s $25 billion auction of 30-year bonds went “very well” and was met with “really good demand” from indirect bidders, according to Tom di Galoma, co-head of global rates trading for BTIG in New York.
“Real money, as represented by indirect bidders, took a higher percentage than usual,” at 70.7% versus an average of 65%, while direct bidders took a below-average 14.5% and dealers got 14.8%, he said.
Thursday afternoon’s sale came a day after Treasury’s record $42 billion auction of 10-year notes, which also received solid demand.
Friday brings revisions to the U.S. consumer-price index, and investors see some risk that the updated figures will show inflation was hotter than initially reported at the end of 2023.
In data released earlier on Thursday, initial jobless claims fell by 9,000 to 218,000 in the first week of February, below the 220,000 that had been expected by economists polled by the Wall Street Journal. The figures, along with last Friday’s nonfarm-payroll report for January, helped to reinforce the view that the U.S. labor market remains surprisingly strong.
The 10-year Treasury yield has stabilized at around 4.1%, with the market focusing on a 62.7% likelihood of at least a quarter-point rate cut from the Federal Reserve by May, according to the CME FedWatch Tool.
Helping to suppress global bond yields was data from overseas showing that consumer prices in China fell 0.8% in January compared with a year earlier. That’s the steepest pace in more than 14 years, and indicates that the country’s economy is gripped by deflation.
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