US yields mostly up as positive momentum persists with recent strong data
- The US yield curve, which has become a barometer of risk sentiment in the bond market, steepened after flattening in the previous session. The spread between US 2-year and 10-year yields rose to 155 basis points.
- Trading was quiet to start the week, with most of Europe still on holiday for Easter Monday. China, Hong Kong and Australia were closed as well.
NEW YORK: US Treasury yields were mostly higher on Monday in choppy trading, lifted by continued optimism about US economic prospects following Friday's blockbuster non-farm payrolls report.
The US yield curve, which has become a barometer of risk sentiment in the bond market, steepened after flattening in the previous session. The spread between US 2-year and 10-year yields rose to 155 basis points.
Trading was quiet to start the week, with most of Europe still on holiday for Easter Monday. China, Hong Kong and Australia were closed as well.
In mid-morning trading, the US 10-year Treasury yield was last up at 1.734%, from 1.72% on Friday.
US 30-year yield were up at 2.389%, from Friday's 2.37%.
On the short end of the curve, US 2-year yields were slightly down at 0.18%, from 0.19% on Friday. Earlier in the session, 2-year yields hit 0.194%, the same level hit in late February that was a roughly eight-month high.
Monday's data remained supportive of the higher-yield trend in Treasuries, with a US service sector index soaring to a record high of 63.7.
US factory orders falling more than expected in February did little to move yields lower.
Treasuries' bearish price momentum remained, most recently driven by the stronger-than-expected US jobs report for March.
Friday's data showed that US nonfarm payrolls surged by 916,000 last month, the biggest gain since August. Data for February was revised higher to show 468,000 jobs created, instead of the previously reported 379,000.
"The trend is still definitely for higher yields and we see the 10-year hitting 2% by the end of the year," said Stan Shipley, fixed income strategist at Evercore ISI in New York.
But he noted that there could be seasonal factors that could put downward pressure on yields.
"We're seeing a bit of a pause here in yields, not only in the US, but globally. We have been trading around these levels in the 10-year since mid-March," Shipley said.
The eurodollar futures market, which tracks short-term interest rate expectations, has fully priced in a US interest rate hike by December 2022, sooner than the fourth quarter of 2023 seen a few months ago.
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