Treasury Yields Steady as Waller Backs More Hikes — SkimNews
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- The 10-year Treasury yield was less than 1 basis point lower at 5.273% on Thursday, after reaching its highest level since 2002 the prior trading day.
- The 30-year Treasury bond yield was down more than 1 basis point at 5.643%, just below a 24-year high hit Wednesday, while the 2-year note yield rose more than 3 basis points to 4.802%.
- Fed Governor Christopher Waller, speaking at a Central Bank of Turkey forum in Istanbul, said more hikes are needed to bring inflation down after roughly 5.5 years above the 2% target, but added that "hikes do not need to come at consecutive meetings."
- Investors expect the Fed to keep rates on hold at its Oct. 28 meeting and pull the trigger on a hike on Dec. 9, according to minutes from the central bank's September meeting released a day earlier.
- Wednesday's $39 billion 10-year note auction drew global central banks as over 80% of bidders, well above the 72.4% auction average, in what BMO Capital Markets' Ian Lyngen called "the highest-yielding 10-year auction since November 2000."
- The Treasury is set to sell $22 billion of 30-year bonds on Thursday after selling $58 billion in 3-year notes on Tuesday, with Lyngen calling the long-bond sale "the next barometer of demand for US debt in an environment of global deficit angst."
- Weekly jobless claims for the week ended Oct. 3 came in at 197,000, down 2,000 from the prior period and below the 200,000 that economists polled by Dow Jones expected.
Why it matters: The auction math tells the real story: despite 10-year yields at a 22-year high, global central banks absorbed over 80% of the $39 billion 10-year note sale, well above the 72.4% historical average, meaning foreign official buyers are backstopping U.S. fiscal demand. Waller's hawkish tone plus September minutes pointing to one more hike make Dec. 9 the consensus date for the next move, even as the market keeps pricing patience.
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