Bulletin
Investor Alert

New York Markets Close in:

Bond Report Archives | Email alerts

Sept. 23, 2022, 3:56 p.m. EDT

Treasury yields post weekly gains, as 2-year rate climbs to highest level since October 2007

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    U.S. 2 Year Treasury Note (TMUBMUSD02Y)
  • X
    U.S. 10 Year Treasury Note (TMUBMUSD10Y)
  • X
    U.S. 30 Year Treasury Bond (TMUBMUSD30Y)

or Cancel Already have a watchlist? Log In

By Vivien Lou Chen and Barbara Kollmeyer

U.S. government-bond yields scored weekly gains on Friday, as the policy-sensitive two-year rate set an almost 15-year high and markets adjusted to the likelihood of more interest-rate increases from the Federal Reserve.

What happened

  • The yield on the 2-year Treasury /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y +1.14% rose 8.8 basis points to 4.212%, the highest level since Oct. 12, 2007, from 4.124% on Thursday, based on 3 p.m. data, according to Dow Jones Market Data. For the week, the yield is up 35.3 basis points, the largest weekly gain since June.

  • The yield on the 10-year Treasury  /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.11% was down 1 basis point at 3.695% versus Thursday’s level of 3.705%. It climbed 24.8 basis points this week, the biggest one-week gain since April.

  • The yield on the 30-year Treasury /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y +3.18% fell 2.5 basis to 3.611% from Thursday’s level of 3.636%. It rose 9.3 basis points this week and is up for the fourth straight week.

What drove markets?

Two- and three-year U.S. yields /zigman2/quotes/211347047/realtime BX:TMUBMUSD03Y +1.17% , which reflect the anticipated trajectory of Fed interest rate hikes, stabilized around 4.2% on Friday, driven largely by expectations for future policy moves. The 5-year rate /zigman2/quotes/211347048/realtime BX:TMUBMUSD05Y +1.25% also broke through 4% on Friday, but failed to hold on to that level.Wednesday’s interest rate increase by the Federal Reserve and hawkish comments by Fed Chairman Jerome Powell have led to an aggressive readjustment of expectations in markets, pushing the 2-, 10- and 30-year yields to multiyear highs this week. The ICE Dollar Index /zigman2/quotes/210598269/delayed DXY +0.02% also continued to shoot up to its highest levels of the past 20 years on Friday.

Market participants remain concerned that the U.S. economy may slip into recession as the Fed could go too far in its monetary tightening cycle. U.S. stocks slumped further on Friday and headed for weekly losses . Meanwhile, the spreads between 2- and 10-year yields went further below zero, to as little as minus 53 basis points at one point, in an ominous sign for the economic outlook.

Need to Know: Growling Powell causes Goldman to cut its S&P 500 price target. Again and   Investors fear ‘ship has sailed’ on soft landing with risk of fed funds headed for 5% in 2023 The Federal Reserve’s 75-basis-point hike on Wednesday, the third of that size in a row, was followed by rate increases across global central banks this week, including Switzerland, Norway, and the U.K.

On Friday, U.K. yields /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +2.87% soared and the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2942% slumped to a level not seen since the mid-1980s as the U.K. government cut a host of taxes and quantified the cost of capping energy bills, saying it will cost £60 billion ($65 billion) over the next six months. The yield on the 2-year gilt /zigman2/quotes/211347169/realtime BX:TMBMKGB-02Y +3.63% , or U.K. equivalent of Treasurys, shot up 41 basis points to 3.911%. The moves are historic — according to data from FactSet, the 2-year yield hasn’t climbed that much since Oct. 3, 2008, when it soared 59 basis points.The historic crash in global bond markets is threatening the ease with which investors will be able to get out of the world’s most-crowded trades , which include long positions on the dollar and U.S. technology companies, according to BofA Securities strategists.

What analysts are saying

“In the week ahead, the third quarter will end as investors continue to digest the far-reaching ramifications from the dizzying array of central bank actions that have recently defined trading in US rates,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery, in a note.“Friday’s selloff which brought 10-year yields above 3.75% was partially in sympathy to the sharp moves in gilts,” they wrote.

/zigman2/quotes/211347045/realtime
add Add to watchlist BX:TMUBMUSD02Y
BX : Tullett Prebon
4.34
+0.05 +1.14%
Volume: 0.00
Dec. 9, 2022 2:38p
loading...
/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
3.56
+0.07 +2.11%
Volume: 0.00
Dec. 9, 2022 2:42p
loading...
/zigman2/quotes/211347052/realtime
add Add to watchlist BX:TMUBMUSD30Y
BX : Tullett Prebon
3.55
+0.11 +3.18%
Volume: 0.00
Dec. 9, 2022 2:42p
loading...
/zigman2/quotes/211347047/realtime
add Add to watchlist BX:TMUBMUSD03Y
BX : Tullett Prebon
4.07
+0.05 +1.17%
Volume: 0.00
Dec. 9, 2022 2:42p
loading...
/zigman2/quotes/211347048/realtime
add Add to watchlist BX:TMUBMUSD05Y
BX : Tullett Prebon
3.75
+0.05 +1.25%
Volume: 0.00
Dec. 9, 2022 2:42p
loading...
/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
104.80
+0.02 +0.02%
Volume: 0.00
Dec. 9, 2022 2:32p
loading...
/zigman2/quotes/211347177/realtime
add Add to watchlist BX:TMBMKGB-10Y
BX : Tullett Prebon
3.18
+0.09 +2.87%
Volume: 0.00
Dec. 9, 2022 5:03p
loading...
/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2271
+0.0036 +0.2942%
Volume: 0.0000
Dec. 9, 2022 2:42p
loading...
/zigman2/quotes/211347169/realtime
add Add to watchlist BX:TMBMKGB-02Y
BX : Tullett Prebon
3.41
+0.12 +3.63%
Volume: 0.00
Dec. 9, 2022 5:03p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.