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Feb. 25, 2021, 9:34 p.m. EST

U.S. government bonds just staged epic yield climbs.What’s next?

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By Sunny Oh

U.S. Treasury yields saw a steady rise in rates ignited into a surge on Thursday, putting government debt across the curve on track to mark their biggest weekly yield moves in months and in some cases years.

What are Treasurys doing?

The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -3.51% rose 12.5 basis points to a 52-week high at 1.513%, based on a 3 p.m. Eastern close, marking the largest yield jump since Nov. 9. The 10-year briefly touched an intraday peak around 1.539%.

The 30-year bond yield BX:TMUBMUSD30Y gained 6.1 basis points to 2.303% to notch its own 52-week peak amid six straight days of gains.

Meanwhile, the 2-year note rate /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y -3.99% advanced 4.1 basis points to 0.166%, logging its sharpest one-day rise since April 6, 2020. The short-dated debt has climbed five straight sessions, matching its longest string of successive rate rises since the period ended Nov. 3.

Separately, the 5-year Treasury note /zigman2/quotes/211347048/realtime BX:TMUBMUSD05Y -3.99% yield picked 18.7 basis points to 0.799%—the largest one day gain since Dec. 7, 2010.

Bond prices fall as yields rise.

For the week, the 10-year and 30-year bonds are on pace for their biggest weekly moves since Jan. 8, while the 2-year yield was on track for its sharpest weekly rate climb since June 5, 2020.

For the month, the 5-year and 10-year are on track for their biggest monthly advance since 2016, while the 30-year is on track for the biggest monthly yield climb since 2009, according to Tradeweb data.

The 2-year was on pace for its sharpest monthly rise since 2019.

What’s driving Treasurys?

The combination of a recovering U.S. economy, thanks to COVID vaccination efforts, trillions in fiscal relief and accommodative monetary policy, are expected to deliver the kind of inflation that hasn’t been seen since the 2008 financial crisis.

That fact has partly added to a selloff in bonds and commensurate rise in yields that has filtered through the broader market.

On top of that, some strategist said Thursday’s powerful yield surge could also be attributed to investors being caught offsides and being forced to close their bullish positions on Treasury futures, in turn, pushing rates higher.

Even before yields took fuller flight on Thursday, Australian, New Zealand, and European government bonds were weakening, with some of the bearish pressure bleeding into the U.S. Treasury bond market.

One of the big fears in the market is that the rate rise unravels the easy-lending conditions fostered by central banks, raising questions whether monetary policy makers will lean against the selloff.

The 10-year German government bond yield /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y -4.95% was up 7.3 basis points to negative 0.22%, while the 10-year Australian bond rate /zigman2/quotes/211347066/realtime BX:TMBMKAU-10Y -0.09% shot up 12 basis points higher to around 1.73%.

add Add to watchlist BX:TMUBMUSD10Y
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-0.10 -3.51%
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May 24, 2022 3:44p
add Add to watchlist BX:TMUBMUSD02Y
BX : Tullett Prebon
-0.10 -3.99%
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May 24, 2022 3:44p
add Add to watchlist BX:TMUBMUSD05Y
BX : Tullett Prebon
-0.11 -3.99%
Volume: 0.00
May 24, 2022 3:44p
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullett Prebon
-0.05 -4.95%
Volume: 0.00
May 24, 2022 6:01p
add Add to watchlist BX:TMBMKAU-10Y
BX : Tullett Prebon
-0.0030 -0.09%
Volume: 0.00
May 24, 2022 4:30p
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