The 10-year U.S. Treasury yield jumped above 1.7% on Thursday, its highest level in more than a year, despite reassurance from the Federal Reserve that it had no plans to hike interest rates anytime soon, nor taper its bond-buying program.
The yield on the benchmark 10-year Treasury note was up 8 basis points to 1.719%. The yield on the 30-year Treasury bond climbed 3 basis points to 2.472%. Yields move inversely to prices. (1 basis point equals 0.01%.)
Yields retreated from their highs of the day in afternoon trading. The 10-year broke above 1.75% earlier in the session, marking its highest level since Jan. 24, 2020, when it topped out at 1.762%. This is also the first time the 30-year has traded above 2.5% since August 2019.
Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, described the move as a “belated overreaction” to the Fed’s projections and Jerome Powell’s statements on Wednesday.
“The realization in the fixed income market really is around commitment that Fed policy is going to be easy for some time and allow for yields to rise. That’s not a new theme,” said LeBas.
Some strategists have pointed to overseas developments as a reason for Thursday’s spike in yields. The Bank of Japan is expected to widen a band around its long-term rate target, according to the Nikkei newspaper, signaling a step toward tighter policy.
Reference: CNBC
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