Bond yields eased on Friday, with the 10-year security reaching its highest level in 15 years. Despite this, longer-term debt continues to decline in value, while short yields remain stable.
- The yield on the 2-year Treasury BX:TMUBMUSD02Y was 4.92%, down 1.2 basis points.
- The yield on the 10-year Treasury BX:TMUBMUSD10Y was 4.24%, down 4 basis points.
- The yield on the 30-year Treasury BX:TMUBMUSD30Y was 4.36%, down 2.8 basis points.
What’s Driving Markets
The main story in financial markets is the decrease in value for longer-term debt, despite the stability of short yields influenced by monetary policy.
This week’s economic data, including retail sales, industrial production, and weekly jobless claims, points to a resilient U.S. economy following a series of Federal Reserve rate increases. No economic data is set for release on Friday.
Furthermore, Treasury issuance is increasing while the Federal Reserve is selling securities. The combination of rising supply and decreasing demand for U.S. sovereigns will likely contribute to pushing the U.S. yield curve higher. Additionally, if the strong economic data translates into higher inflation, it will likely have a further impact on yields. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, emphasizes this point.
Bond yields outside the U.S., such as the 10-year German bund BX:TMBMKDE-10Y and the 10-year Japanese yield BX:TMBMKJP-10Y, have also been rising. The German bund reached its highest level since 2011, while the Japanese yield hit its highest level in nearly eight years.