Long-Dated Treasury Yields in Consolidation Mode

Long-dated Treasury yields have stabilized early on Friday, following a sharp decline over the previous three sessions. Investors are now eagerly awaiting the release of the October jobs report. Notably, the yield on the 2-year Treasury note has slightly increased.

Yields Update

  • The yield on the 2-year Treasury note (BX:TMUBMUSD02Y) currently stands at 4.995%, up from 4.975% at 3 p.m. Eastern on Thursday. It’s important to note that yields and debt prices move inversely to each other.
  • The 10-year Treasury note yield (BX:TMUBMUSD10Y) is presently at 4.667% compared to 4.668% on Thursday afternoon.
  • The yield on the 30-year Treasury bond (BX:TMUBMUSD30Y) has ticked slightly higher to 4.824% from 4.82% late Thursday.

Market Drivers

Yields experienced a retreat this week after the U.S. Treasury announced plans for reduced issuance on the long end of the market, a move contrary to investors’ expectations. Additionally, remarks made by Federal Reserve Chair Jerome Powell were interpreted as suggesting that interest rate hikes may have come to an end.

Thursday’s yield decline was further extended by data revealing an increase in initial U.S. jobless claims last week, which hinted at potential softening in a robust labor market.

Key Events

Today’s key event is the release of the October jobs report at 8:30 a.m. Eastern time. Economists polled by The Wall Street Journal anticipate that it will show the addition of 170,000 jobs in October, following an unexpectedly high increase of 336,000 jobs in the previous month.

At 10 a.m., the Institute for Supply Management will unveil its October services index.

Analyst Insights

Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, points out that any positive data regarding job additions or wage growth could serve as a reality check for bond traders. A robust job market and a strong economy may prompt the Federal Reserve to adopt a hawkish stance once again.

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