U.S. government bond yields rose Tuesday, pushing the long-dated 30-year bond to its highest level in three months, extending a climb that has been under way since late September when the Federal Reserve signaled that it could begin tapering its monthly bond purchases by the end of 2021.
What yields did
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The 10-year Treasury note rate
TMUBMUSD10Y,
1.534%
is at 1.528%, versus 1.481% at 3 p.m. Eastern Time on Monday.
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The 2-year Treasury note yields
TMUBMUSD02Y,
0.289%
0.288%, compared with 0.278% a day ago.
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The 30-year Treasury bond
TMUBMUSD30Y,
2.105%
was yielding 2.097%, from 2.048% on Monday.
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The 30-year, aka the long bond, rose to its highest level since June 28, Dow Jones Market Data.
What’s driving the market?
The recent rise in yields has been blamed partly on fears the Federal Reserve may be forced to hasten the rate of reduction in $120 billion in monthly purchases and deliver interest rate increases as inflation has risen faster the forecast.
The health of the jobs markets is likely to be the main driver for government debt this week, with data from the Labor Department’s monthly report due on Friday.
Yields on Tuesday also gained some loft as stocks rebounded from a slump that had been at least partly fueled by declines in large-capitalization stocks.
Markets have been processing a host of issues in a seasonally turbulent period, September and October. Those include the federal debt-limit debates in Congress, rising inflation, the Fed’s policy moves, and concerns about the possibility of so-called stagflation—an economic environment marked by high unemployment, high inflation, and low economic growth, experienced in the U.S. in the 1970s.
On the data front, a report from the Institute for Supply Management Tuesday may have helped to further propel yields higher, as it points to economic growth that could sustain the bull market, some analysts say.
The ISM said its services index rose to 61.9 in September from 61.7, coming in above forecast. A reading of more than 50 indicates an expansion in activity.
Investors will be watching for a private-sector report on employment from Automatic Data Processing Inc.
ADP,
+1.90%
due at 8:15 a.m. ET. The report will be a precursor the Friday nonfarm-payrolls report.
What analysts are saying
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Stocks rebounded nicely from Monday’s drop. Treasury bonds fell, pushing yields higher. The yield on 10-year Treasurys advanced five basis points to 1.53%. The Nasdaq-100 rose 2% led by mega-cap names, even with higher rates, wrote the analysts at MKM Partners, in a Tuesday note.
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“Equity volatility remains high the first week of October which keeps a bid in Treasury prices,” wrote Tom di Galoma, managing director at Seaport Global Holdings, in a daily note. Next week’s Treasury supply on Tuesday and Wednesday after the Columbus Day holiday should allow for yields to rise into late Q4. All eyes on US Jobs data on Friday,” he wrote.
