U.S. Treasury Yields Fall After Notching Big Gains Last Week
By Sebastian Pellejero and Sam Goldfarb
Yields on most U.S. government bonds fell Monday, showing
further signs of stabilizing after soaring to multi-month highs
The yield on the benchmark 10-year Treasury note recently traded
around 1.429%, according to Tradeweb, down from 1.459% at Friday's
Shorter-dated yields also headed lower, in a reversal from last
week when investors bet that the Federal Reserve will start raising
interest rates earlier than previously anticipated in response to
an expected burst of economic growth and inflation.
The five-year yield recently traded around 0.719%, from 0.775%
Friday. Yields fall when bond prices rise.
Higher yields have helped some investors regain their appetite
for Treasurys. While Treasury yields were expected to rise this
year as the U.S. economy recovered, some analysts say the market's
expectations for interest rates have moved too quickly, presenting
an opportunity for investors to buy bonds at attractive levels.
Analysts at TD Securities recently recommended clients buy
five-year Treasurys because of the pronounced move in yields. "We
think the market's pricing of the first hike in March 2023 is too
aggressive," they wrote in a Feb. 25 note. "But the biggest risk to
the trade is if the Fed is unwilling/unable to allay taper
Fed Chairman Jerome Powell in recent weeks has reiterated his
stance that the central bank intends to keep its easy-money
policies until substantial progress has been made toward its
employment and inflation goals. The central bank is expected to
continue to support the economy with near-zero interest rates and
large-scale bond purchases to keep U.S. borrowing costs low and
help the recovery.
Investors will be looking to coming Fed official appearances for
clues about whether the central bank will push back against the
recent rise in yields. Last week, European Central Bank officials
reiterated promises to keep yields at low levels. On Sunday, the
Reserve Bank of Australia said it made an unscheduled purchase
Friday of around $2.4 billion of debt in response to rising
The 10-year yield pared declines Monday morning after IHS Markit
survey data showed U.S. manufacturing activity continued to expand
at a solid pace in February, beating expectations from economists
polled by The Wall Street Journal.
Yields on 20-year and 30-year U.S. Treasurys rose from Friday's
levels. That marked a return to the trend from earlier this year
when investors bet on a growing gap between shorter and longer-term
yields, or what is known on Wall Street as a steeper yield
The yield on the 30-year U.S. Treasury bond was recently 2.209%,
up from 2.187% Friday.
Write to Sebastian Pellejero at firstname.lastname@example.org and
Sam Goldfarb at email@example.com
(END) Dow Jones Newswires
March 01, 2021 12:47 ET (17:47 GMT)
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