US Treasury yields edge higher, day after hefty fall

LONDON: US Treasury yields edged higher on Friday, pulling back from multi-week lows hit the previous day as expectations of strong global recovery got a boost from latest Chinese economic data.

Ten-year Treasury yields fell more than 10 basis points on Thursday, the biggest one-day move down since early-November, Yields touched a low of 1.5280% -- well off 14-month highs hit recently above 1.77%.

The sudden rally, which came despite robust retail sales data, perplexed market players, who linked it either to hedge funds covering short Treasury positions, Japanese buying or just a dash for safety amid mounting Russia-US tensions.

On Friday, yields rose again to 1.56%, up 3.5 basis points on the day but still down eight bps from where the market opened on Thursday.

"It's impossible to explain the move yesterday, perhaps it has something to do with a safety bid following US/Russia tensions," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.

"But the fact is that higher yields would have bought in buyers, especially from Asia."

The Treasury moves were not replicated to the same extent in Europe on Thursday, when German yields slipped around 3 bps.

Friday's mild selloff in bond markets came against the backdrop of upbeat sentiment in world stock markets.

Global stocks hit a record high on Friday and oil climbed after strong US and Chinese economic data bolstered expectations of a solid global recovery from the coronavirus-induced slump.

US Treasury yields were 2-4 bps points higher across the curve, moves that analysts noted were modest compared to Thursday's sharp falls.