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US Treasury Yields Jump 25 Basis Points Since Wednesday – Here’s What it Means for Investors

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On Monday, the U.S. 10 Year Treasury yield (US10Y) moved 8 basis points higher to 3.61%, following a Friday jump of 14 basis points. This means that the 10-year Treasury yield has risen 25 basis points since the close on Wednesday, Powell-day, with 11 basis points today and 13 basis points on Friday, to 3.64%, unwinding in three days over a quarter of the large 88-basis point drop since late October.

On Friday, the yield on the 10-year Treasury note increased as investors examined economic information and comments from Federal Reserve authorities to gauge the outlook for inflation and monetary policy. The 10-year Treasury yield had an increase of 4 basis points, and was being traded at 3.719%. The 2-year Treasury dropped by less than 1 basis point to 4.5%.[0]

The US 2 Year Treasury yield (US2Y) rose by 11 basis points on Monday to 4.41%, which now is above the instrument’s 100-day moving average.[1] Friday saw a surge of 20 basis points, which has been followed by an increase in the 2-year.[1] US yields were higher, with the 2yr yield rising 8bp to 4.50% and the 10yr rising 6bp to 3.68%.[2] The spread between the 2-year and 10-year Treasury notes narrowed slightly to -82 basis points, but during the day dropped to as low as -87 basis points, surpassing the lows from December and the lowest since the early 1980s before there was a late selloff in 10-year Treasury notes.[3]

This week, Richmond Fed President Barkin joined the multitude of Fed officials in expressing their views.[3] He agreed with the rest of the committee that inflation was still high, thus making it important to “stay the course” and that “we’ve still got a ways to go”.[3] The two-year Treasury yield has jumped by 37 basis points since the close on Thursday, the day after Powell had spoken: 16 basis points today and 21 basis points on Friday, to 4.46%, unwinding in two days more than half of the 65-basis-point decline from the high in early November.

Investors interpreted Powell’s slumped posture and soft voice, and his struggle to politely answer the same leading questions over and over again, as a promise of a pivot.[4] Throughout the trading day in the US, equity prices increased but then dropped by the close of the session.[2]

0. “10-year Treasury yield rises, traders look ahead to key U.S. inflation data” CNBC, 10 Feb. 2023, https://www.cnbc.com/2023/02/10/us-treasury-yields-investors-await-data-fed-speaker-remarks.html

1. “Treasury ETFs slide as yields spike after explosive payrolls report” Seeking Alpha, 6 Feb. 2023, https://seekingalpha.com/news/3932353-treasury-etfs-sink-as-yields-spike-after-explosive-payrolls-report

2. “Mixed messages yet a clear one from bond yields” Forex Factory, 9 Feb. 2023, https://www.forexfactory.com/news/1204870-mixed-messages-yet-a-clear-one-from-bond

3. “Markets Today: Mixed messages yet a clear one from bond yields | Business Research and Insights” Business Research and Insights, 9 Feb. 2023, https://business.nab.com.au/markets-today-mixed-messages-yet-a-clear-one-from-bond-yields-58195/

4. “Delayed Reaction? 2-Year & 10-Year Treasury Yields Jump, Mortgage Rates Spike 40 Basis Points in Two Days to …” WOLF STREET, 6 Feb. 2023, https://wolfstreet.com/2023/02/06/delayed-reaction-2-year-10-year-treasury-yields-jump-mortgage-rates-spike-40-basis-points-in-two-days-to-6-39

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