Bond yields softened on Thursday as a risk averse tone across markets encouraged buying of government debt and as traders waited for crucial U.S. data.
What’s happening
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The yield on the 2-year Treasury
TMUBMUSD02Y,
2.979%
slipped 5.3 basis points to 3.00% versus a close of 3.05% on Wednesday . Yields move in the opposite direction to prices.
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The yield on the 10-year Treasury
TMUBMUSD10Y,
3.048%
fell 3.5 basis points to 3.06% versus 3.09% -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.180%
eased 3 basis point to 3.19% from 3.22% on Wednesday.
What’s driving markets
Yields were softer on Thursday, as a global risk asset sell-off amid economic growth concerns encouraged investors to seek sanctuary in highly rated bonds.
Still, the benchmark 10-year Treasury yield is still up nearly 160 basis points since the start of the year, according to Dow Jones Market Data, pushed higher by the Federal Reserve hiking interest rates in response to surging inflation.
A raft of U.S. data set for release at 8:30 a.m. Eastern should give further clues to to the likely pace of Fed tightening.
The PCE inflation report, which is closely watched by the Fed, is forecast to show a small dip in May from 4.9% to 4.8%, year-over-year.
Investors will be keen to see whether the weekly initial jobless claims shows if there is stress in the labor market, with those registering for unemployment expected to rise marginally from 229,000 to 230,000.
Similarly, consumer spending and income figures will be scanned to see whether recent poor household sentiment indicators are impacting spending.
Elsewhere, German 10-year Bund yields
TMBMKDE-10Y,
followed the U.S. trend, dipping 12 basis points to 1.40%, after the German unemployment rate rose to 5.3%, worse than the forecast 5%.
