#Bond Report: Treasury yields at 2 and 10-years carve out fresh 52-week highs and stocks get whipped around

What are yields doing?

• The 10-year Treasury note
  TMUBMUSD10Y,
  1.770%
  yields 1.779%, up 1 basis point compared with 1.769% at 3 p.m. Eastern Time. Yields and debt prices move opposite each other.

• The 2-year Treasury note rate
  TMUBMUSD02Y,
  0.902%
  was at 0.904%, up 3.6 basis points versus 0.868% on Friday.

• The 30-year Treasury bond
  TMUBMUSD30Y,
  2.097%
  yields 2.109%, down 0.7 basis point from 2.116% on Friday afternoon.

• The 2-year Treasury established a new 52-week high yield and added to its highest rate since Feb. 27, 2020, while the 10-year Treasury note also carved out a 52-week high, adding to the highest yield since Jan. 17, 2020.

What’s driving the market

Yields at the 2- and 10-year extended their recent march higher, creating further turbulence in once-highflying technology and growth-oriented stocks which are sensitive to rising rates.

Earlier in the session, the Nasdaq Composite Index
COMP,
+0.05%
was on the verge of booking a correction, falling 10% from its recent peak, but the benchmark, as well as the Dow Jones Industrial Average
DJIA,
-0.45%
and S&P 500 index
SPX,
-0.14%,
came off their lows as the move in yields took a breather intraday Monday.

Meanwhile, Senate confirmation hearings for the No. 1 and 2 posts at the Fed will soon come into focus. Powell’s nomination hearing for a second term as Fed boss is scheduled for 10 a.m. Eastern Time Tuesday, while Brainard’s is due to take place at the same time on Thursday.

Neither are expected to be challenged, despite pushback from some Democrats who wanted someone tougher on bank regulations and climate change. However, the policy makers’ commentary on the state of the economy and the strategy for combating a surge in inflation will be closely watched by investors.

The prospects of higher inflation and tighter Fed policy to address climbing costs of living have been underpinning the recent bounce in rates, lending more significance to reports on elevated pricing pressures in recent weeks.

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The closely watched consumer-price index reading is due at 8:30 a.m. ET on Wednesday, and is expected to show a rise of more than 7% from a year earlier, for the first time since 1982. The producer-price index is slated for 8:30 a.m. Thursday.

On Friday, December’s jobs report showed only 199,000 new jobs were created, significantly below the 422,000 gain expected by economists surveyed by The Wall Street Journal. The unemployment rate, however, fell to 3.9% — a pandemic low —from 4.2%.

Read: Jekyll-and-Hyde U.S. jobs report not as ugly as it looks

What strategists are saying

• “The pace at which bond yields jumped, rather than the move itself, is what concerned equity investors, particularly those holding high valuation growth stocks, Big Tech names, and more speculative areas of the market,” wrote John Lynch, chief investment officer at Comerica Wealth Management, in emailed comments.

•  “Look for another upward ratchet if December core CPI arrives higher than .5% on Wednesday morning. Two things to consider before revising economic and market thinking for the entire year, however,” wrote Jim Vogel, executive vice president at FHN Financial, in a Monday research note. “First, 2022 headlines are incremental and not pivotal. The pivot was six weeks ago. Second, last week’s flows pushed yields 20-25bp higher without the volume that accompanies a major turn.”