Bond yields crept higher on Friday, as investors remained fearful of further Federal Reserve rate increases after a series of hot economic data.
What’s happening
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The yield on the 2-year Treasury
TMUBMUSD02Y,
4.680%
was 4.69%, up 2.3 basis points. Yields move in the opposite direction to prices.
-
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.899%
was 3.90%, up 4.2 basis points.
-
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.945%
was 3.95%, up 3.1 basis points.
What’s driving markets
Short-term bond yields were near their highest level of the cycle, after producer price data along with speeches from Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard saw traders begin to price in the possibility of a 50-basis point rate hike in March.
Economists at Goldman Sachs late on Thursday added a rate hike in June to their forecasts. “In light of the stronger growth and firmer inflation news, we are adding a 25bp rate hike in June to our Fed forecast, for a peak funds rate of 5.25-5.5%,” they told clients.
The economic calendar for Friday includes two more Fed officials, Richmond Fed President Tom Barkin and Fed Gov. Michelle Bowman, as well as data on import prices and leading economic indicators. There’s a three-day weekend in observance of Washington’s Birthday on Monday.
