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U.S. Treasury yields climbed on Thursday, extending their multi-session rise as bond traders grew increasingly optimistic on the U.S. economic recovery as states eased business lockdown measures.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.815% rose 5.7 basis points to 0.818%, its highest since March 25, while the 2-year note rate TMUBMUSD02Y, 0.196% ticked 0.4 basis point lower to 0.194%. The 30-year bond yield TMUBMUSD30Y, 1.620% rose 7.2 basis points to 1.623%, its highest since March 19.
What’s driving Treasurys?
Bond-market bulls capitulated on Thursday as analysts noted there were a lack of obvious catalysts for the sudden bond-market selloff.
Some suggested the rise in yields reflected expectations for an economic growth rebound as U.S. states began to allow businesses to reopen, even though data underlined the continued devastation of households and businesses.
A snapshot of the labor market’s health on Thursday showed the total number of Americans filing for unemployment benefits this week increased by another 1.9 million. On Wednesday Automatic Data Processing Inc. had reported 2.76 million job losses in May, much less than economists’ forecast of 8.66 million. Investors will now focus on the official U.S. Labor Department jobs report due Friday.
Investors also eyed the European Central Bank’s policy decision Thursday to leave its policy interest rates unchanged but expand its asset purchases by another €600 billion ($675 billion) to a total of €1,350 billion. The ECB also said its bond-buying would extend to run at least through the end of June 2021.
See: Pandemic bond-buying program is now ECB’s real crisis-fighting ‘bazooka,’ analysts say
The 10-year German government bond yield TMBMKDE-10Y, -0.317% was down 3 basis points to 0.32%, and the 10-year Italian bond yield TMBMKIT-10Y, 1.412% slid 15 basis points to 1.42%.
Additional ECB support has given a significant boost to the bonds of weaker eurozone economies like Italy and Spain which are expected to see a large uptake by the ECB.
What did market participants’ say?
“Markets are forward-looking. There is some anticipation that this recovery will happen, but there are going to be some bumps on the road as we go along,” said Charles Ripley, senior investment strategist for Allianz Investment Management, in an interview.
“All focus will be on the labor market report tomorrow. We anticipate it will be the worst one will be seen,” he said.
