Minimal Change in Bond Yields

by Warren Seah

Bond yields experienced a slight decline on Monday, following a period of increased short-term yields. However, longer-term securities remained relatively steady.

Key Details

  • The yield on the 2-year Treasury (BX:TMUBMUSD02Y) decreased by 1.3 basis points to 5.07%. It is important to note that yields move inversely to prices.
  • The yield on the 10-year Treasury (BX:TMUBMUSD10Y) dropped by 1 basis point to 4.22%.
  • The yield on the 30-year Treasury (BX:TMUBMUSD30Y) decreased by 2.1 basis points to 4.27%.

Last week, the two-year yield increased by 12 basis points, while the 10-year and 30-year yields showed little change, according to Dow Jones Markets Data.

Future Projections

Federal Reserve Chair, Jerome Powell, indicated on Friday that if economic data continued to surpass expectations, the central bank may need to further increase interest rates.

Barclays Capital analysts, led by Anshul Pradhan, suggest shorting 2-year Treasurys as they believe the current markets underestimate the likely path of monetary policy. They argue that the strength of the U.S. economy and concerns about soft data weakness and recent financial conditions tightening are exaggerated.

The analysts also noted that the bond markets have not overly reacted to recent news developments and that current yield levels remain within reasonable limits.

Looking Ahead

No significant economic data is scheduled for release on Monday. However, it marks the beginning of a busy week which includes the PCE price index and nonfarm payrolls data.

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