Treasury yields mostly rose Thursday, coming off from session lows, after an auction of short-dated government bonds weighed prices, and fourth-quarter economic data showed the U.S.’s heady momentum had waned at the end of last year.
The 10-year Treasury note yield TMUBMUSD10Y, +0.96% picked up 1.6 basis points to 2.389%, lifting off from its lowest levels since Dec. 2017. The 2-year note yield TMUBMUSD02Y, +1.08% rose 2 basis points to 2.228%, while the 30-year bond yield TMUBMUSD30Y, +0.43% fell 1.1 basis points to a fresh three-month low of 2.811%. Bond prices move inversely to yields.
Market participants say yields rose in part because investors were making room for the wave of supply during the so-called “concession” process, when broker-dealers bid yields higher in an effort to ensure a successful showing in a coming bond auction. The Treasury Department sold $32 billion of 7-year notes, following sales of $81 billion of debt earlier in the week.
With the recent Treasurys rally starting to show signs of slowing on Thursday, traders say the bond market could come under pressure in the coming days, even if lackluster U.S. growth points to shrinking yields in coming months.
“Although yields have dropped precipitously, there is likely more room to decline over the longer term. [But] short-term we are over-bought,” said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co, in emailed remarks.
See: Bond market’s March madness leaves Treasury yields on track for biggest monthly drop since 2016
Investors digested some economic data in the morning. Initial jobless claims for the week ending in March 23 fell 5,000 to 211,000. The final update of the fourth-quarter gross domestic product numbers showed the U.S. had grown 2.2%, in line with economists’ expectations. That leaves the U.S. expanding at less than 3% over 2018 even with the boost of tax cuts and other fiscal boosts passed at the end of 2017.
In Europe, British lawmakers were set to vote again on U.K. Prime Minister Theresa May’s deal. She promised to resign if her deal passes through Parliament, in a bid to save her plan to leave the European Union. But the Democratic Unionist Party, crucial to getting her deal passed, said they would vote against the deal.
The U.K. 10-year government gilt yield TMBMKGB-10Y, -1.41% was mostly unchanged at 1.001%, Tradeweb data show.
In a busy day for the Federal Reserve, several members of the Federal Open Market Committee spoke on Thursday. Among the highlights, Fed Vice Chairman Richard Clarida said easy central bank policy could help stave off global growth shocks, and New York Fed President John Williams said he wasn’t worried about a potential recession. St. Louis Fed President James Bullard will speak at 6:20 p.m.
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