US Treasury yields climb ahead of jobless debt and durable goods

U.S. Treasury yields were higher early Thursday, after the 10-year Treasury saw its yield rise for the first time in five sessions on Wednesday and as the long bond extended its yield drop to a fifth consecutive day.

Fixed income investors await a slew of data, including a weekly update on unemployment benefit claims, a read on April durable goods orders, an update on first quarter gross domestic product and a reading of April pending home sales.

The data precedes a key measure for bond investors, April’s personal consumption spending, due Friday, and the May jobs report due the following Friday in a holiday cut-off Memorial Day week.

How Treasurys Work
  • The 10-year Treasury bill TMUBMUSD10Y,
    was down 1.592%, up 2 basis points from Wednesday’s 3 p.m. ET level.

  • The 30-year Treasury TMUBMUSD30Y,
    known as the long bond, yielded 2.276%, up 1.8 basis points.

  • The 2-year Treasury bill TMUBMUSD10Y,
    the rate was 0.148%, down from 0.147% a day ago.

On Wednesday, the 10-year Treasury note snapped a four-day yield drop, while the 30-day note extended its rate cut to a fifth consecutive session, hovering around the lowest level since May 6 .

Fixed Income Market Factors

After a steady buying period that had pushed yields to lows of around three weeks, bond yields are slowly rising, but are trading within a relatively narrow range.

Recent trade information is Federal Reserve members’ insistence that they will focus on securing as many jobs as possible before withdrawing market support, including a buyout program. assets of $ 120 billion per month.

Still, market participants are starting to bet that the Fed may start signaling more clearly that it is ready to cut back on its market-friendly bond purchases in August or September.

On Wednesday, Fed vice chairman oversight Randal Quarles said it would soon be time for Fed officials to start debating the slowdown in central bank bond purchases if the economy continues to improve at its current rate. Federal Reserve Vice Chairman Richard Clarida also said on Tuesday that U.S. central bank officials could perhaps start discussing the appropriate time to cut their bond buying program at upcoming policy meetings,

This week, however, investors may focus less on this week’s economic reports and more on the May jobs report next week, following a disappointing April jobs report that propelled the 10-year to a return of around 1.48%.

In the near term, investors will be watching for signs of what May’s jobs report might show in Thursday’s weekly jobless claims figures. Economists polled by Dow Jones expect 425,000 Americans to have claimed unemployment benefits during the week ended May 22. In the previous week, jobless claims hit a new pandemic-era low of 444,000.

Meanwhile, investors expect an auction of $ 62 billion of 7-year US Treasury bills TMUBMUSD10Y,
this will be looked at closely as a measure of appetite and its impact on the broader fixed income market. The 7-year note yielded 1.258% Thursday morning, against 1.230%.

What are the strategists saying?

“I was expecting grade 10 to go up around 2% again, but I’m starting to doubt myself. Otherwise, it suggests that this next business cycle ends up being weaker than the last – right now we’re sitting at the bottom of the last cycle (in terms of 10-year yields), ”Crit Thomas, Global Market Strategist at a Touchstone Investments mutual fund company, told MarketWatch in remarks via email.

“It’s hard to swallow, but it would be consistent with the trend we’ve seen in recent cycles (and with what we’ve seen in Japan and Europe). It would also suggest that all of these massive monetary and fiscal stimulus have done nothing for the long-term prospects of our economy, ”the analyst said.

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Tommy Dodd

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