SPY380.36-1.97 -0.52%
DIA309.45-4.53 -1.44%
IXIC13,192.35+72.96 0.56%

TREASURIES-Yields touch records at both ends of the curve in volatile session

TREASURIES-Yields touch records at both ends of the curve in volatile session

· 02/05/2021 12:52
TREASURIES-Yields touch records at both ends of the curve in volatile session

Updates with market activity, analyst comment

By Ross Kerber

- Traders drove U.S. Treasury yields to record levels at both ends of the yield curve on Friday in a choppy session after a report showed employment growth rebounded less than forecast in January, strengthening expectations of more stimulus spending in Washington.

The benchmark 10-year yield US10YT=RR was last up 1.6 basis points at 1.1549% having risen to 1.188%, its highest since March 20, 2020.

At the other end of the curve the yield on the 2-year note, seen as an indicator of inflation expectations, was down almost a basis point at 0.1072% after matching its all-time low of 0.105% last reached May 8, 2020.

The movement left the closely watched part of the U.S. Treasury yield curve measuring the gap between yields on the two notes US2US10=RR, seen as an indicator of economic expectations, at 105 basis points, about 3 basis points higher than Thursday's close and its highest since May 2017.

Priya Misra, TD Securities head of global rates strategy, said the volatile trading showed investors focused on incremental news about spending talks in Washington after the morning's jobs report did not offer a clear case for either political parties' priorities.

Expectations "are all over the place," she said.

U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money from the government to aid the recovery from the COVID-19 pandemic.nL1N2KA34D

Analysts described the results as having mixed implications for government bond markets and giving traders a chance to take profits after yields on longer-term U.S. notes rose in recent days.

"The jobs report isn’t bad. You should expect a lot of volatility at a time like this," said Subadra Rajappa, head of U.S. Rates Strategy for Societe Generale in New York. The unemployment rate was at 6.3% in January, which Rajappa said put it close to achieving the 5% targeted by the U.S. Federal Reserve.

U.S. stocks rose on Friday with the S&P 500 and the Nasdaq hitting record highs as stimulus talks, upbeat earnings and progress in vaccine rollouts bolstered bets of a speedy economic recovery. nL4N2KB3YP


February 5 Friday 12:26PM New York / 1726 GMT


Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.0325

0.033

-0.005

Six-month bills US6MT=RR

0.045

0.0456

-0.007

Two-year note US2YT=RR

100-9/256

0.1072

-0.008

Three-year note US3YT=RR

99-214/256

0.1811

-0.008

Five-year note US5YT=RR

99-150/256

0.4592

0.000

Seven-year note US7YT=RR

99-144/256

0.8146

0.006

10-year note US10YT=RR

97-108/256

1.1549

0.016

20-year bond US20YT=RR

93-152/256

1.7601

0.019

30-year bond US30YT=RR

92-172/256

1.9507

0.019





DOLLAR SWAP SPREADS




Last (bps)

Net Change (bps)


U.S. 2-year dollar swap spread

9.25

0.75


U.S. 3-year dollar swap spread

9.75

0.50


U.S. 5-year dollar swap spread

12.00

0.25


U.S. 10-year dollar swap spread

7.25

0.25


U.S. 30-year dollar swap spread

-21.25

0.75










(Reporting by Ross Kerber in Boston; editing by Jonathan Oatis, Kirsten Donovan)

((ross.kerber@thomsonreuters.com; (617) 856 4341; Reuters Messaging: Ross.Kerber.Reuters.com@Reuters.net))