Bond Report: 10-year Treasury yield swings back below 4% as bond buying picks up steam

by | Mar 3, 2023 | Stock Market

The benchmark 10-year Treasury yield fell back below 4% on Friday, as buying momentum picked up in the afternoon and traders reconsidered the significance of robust U.S. data released earlier in the day.

What’s happening
The yield on the 2-year Treasury
was 4.859%, down from 4.902% on Thursday. Thursday’s level was the highest since July 17, 2007, based on 3 p.m. figures from Dow Jones Market Data.

The yield on the 10-year Treasury
slipped to 3.970% from 4.072% Thursday afternoon. Thursday’s level was the highest since Nov. 9.

The yield on the 30-year Treasury
fell to 3.893% from 4.019% late Thursday. Thursday’s level was the highest since Nov. 14.

What’s driving markets Buyers jumped back into the Treasury market on Friday, taking advantage of yields trading mostly above 4%.In Friday’s data releases, a gauge of U.S. business conditions at service sector companies, such as hotels and restaurants, held steady at a robust 55.1% in February. The report, produced by the Institute for Supply Management, showed the U.S. economy is still in expansion mode despite higher borrowing costs.The ISM data initially helped to pare some of the 10-year yield’s decline earlier on Friday and to briefly push the rate back above 4%. However, the yield then fell below that level once again in afternoon trading.Remarks made on Thursday by Atlanta Fed President Raphael Bostic helped to support some of Friday’s market action. Bostic said he is firmly in the camp that supports quarter-of-a-percentage-point interest rate hikes,  and also reportedly indicated that the central bank could be in a position to pause its rate hikes sometime this summer. What analysts are saying “Since the March FOMC meeting is later than usual this year (March 22), participants will have an opportunity to see not only next week’s February jobs report but also the CPI and retail sales report the following week before submitting their forecasts for the Summary of Economic Projections,” said Michael Gapen, U.S. economist, and others at BofA Securities.“If the data show that the re-acceleration at the start of the year was short-lived, the Fed’s narrative would become much easier, …

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