Bond Report: Bond yields edge higher with rally in risky assets continuing

by | Mar 30, 2023 | Stock Market

Bond yields edged higher on Thursday, as the rally in risky assets continued with worries about the banking system fading into the background.
The yield on the 2-year Treasury
was 4.09%, up 3.3 basis points. Yields move in the opposite direction to prices.

The yield on the 10-year Treasury
was 3.57%, up 0.1 basis points.

The yield on the 30-year Treasury
was 3.77%, up 1 basis points.

What’s driving markets There’s been a retreat from government bonds, and a move back into risky assets, as the First Citizens
deal to buy most of fallen SVB Financial seemingly put an end to concerns about deposit flight upending big banks.

The 2-year yield has climbed more than a half percentage point from as low as 3.55% on Friday. This stabilization of the bank sector has put attention back on central bank efforts to fight inflation, with a key release due out of the U.S. on Friday when the PCE price index gets released. Data from Spain released Thursday showed inflation falling to a 20-month low in March. Data from Germany is set for release at 8 a.m. Eastern, as inflation in the North Rhine Westphalia region slowed to 6.9% year-over-year from 8.5%. U.S. jobless claims data is set for release, as well as the second revision to GDP data and speeches from Boston Fed President Susan Collins and Richmond Fed President Tom Barkin.What they’re saying “The worry I have is that policy is still not tight enough to completely tame inflation organically, but starting to get too tight to avoid accidents. Clearly if the accident is bad it can easily cause a big enough economic shock to make a big dent in lowering inflation,” said Jim Reid, strategist at Deutsche Bank.

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