U.S. Treasury yields tick higher as global bond rout slows — SkimNews
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- 10-year Treasury note yield rose less than one basis point to 5.17% on Friday, after hitting its highest rate since June 2007 on Thursday
- 30-year Treasury bond held at 5.463% after surging to levels not seen since 2004, while the 2-year note yield was little changed at 4.899%
- Federal Reserve Governor Michael Barr said Wednesday that "further policy adjustments" can be expected to bring inflation to target, contributing to the yield climb alongside stubbornly high oil prices and a purchasing managers' index report at its highest level in more than four years
- Japanese government bonds, U.K. gilts, German bunds, and other eurozone bonds all hit fresh highs during this week's global selloff, though Eurozone and Japanese yields edged lower on Friday
- CME FedWatch shows traders pricing in a nearly 71% chance of a Fed rate hike in October
- ING analysts Padhraic Garvey and Benjamin Schroeder wrote that government bond yields are "primed to remain under pressure" on debt dynamic theory, with particular pressure for re-widening in 10-year swap spreads
- Treasury Secretary Bessent's bond buyback programme has successfully tightened swap spreads, providing the one noted counterbalance to rising yields, per ING
Why it matters: With the 10-year at 5.17% — its highest since June 2007 — and traders implying a 71% chance of an October Fed rate hike, borrowing costs for mortgages and corporate debt remain elevated. ING warns that debt dynamics alone are primed to keep yields under pressure, though Bessent's buyback programme is the one force actually tightening swap spreads.
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