Treasury yields fell Monday, continuing to pull back after a decline at the end of last week saw benchmark rates retreat from their highest levels in a decade.
What yields are doing
-
The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.517%
was at 4.483%, ticking down from 4.489% at 3 p.m. Eastern on Friday. Yields and debt prices move opposite each other. -
The 10-year Treasury note yield
TMUBMUSD10Y,
4.226%
was 4.192%, down from 4.212% Friday afternoon. -
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
4.365% ,
however, rose to 4.319%, up from 4.303% late Friday.
What’s driving yields
Yields pulled back sharply on Friday, with the policy-sensitive 2-year rate leading the way, as traders scaled back the probability of another 75 basis point hike in December after The Wall Street Journal reported policy makers are likely to debate the size of that month’s rate increase during their November meeting.
Analysts said investors also took advantage of a selloff that had driven the 2-year yield to a 15-year high last week, the 10-year to a 14-year high and the 30-year traded to its highest since 2011 to buy the dip.
Investors on Monday were awaiting October purchasing managers index readings for the U.S. manufacturing and services sectors at 9:45 a.m. Eastern. A key reading on inflation, the personal-consumption expenditures price index, is due on Friday.
What analysts say
“The bearish repricing that has brought most of the major Treasury benchmarks to [around] 4.50% will be challenged in the coming days as investors contemplate whether this is the dip to buy,” wrote Ian Lyngen and Benjamin Jeffery, rates strategists at BMO Capital Markets, in a note.
“To be fair, it hasn’t been a year in which attempting to lock in higher yields on each incremental backup in rates has been fulfilling. In fact, since closing 2021 at 1.51%, 10-year yields have increased by nearly 300 bp (basis points) as inflation has proven to be far more stubborn than initially anticipated,” they wrote.
