This post was originally published on this site
U.S. Treasury yields lacked direction Thursday after investors sifted through a raft of tepid economic data that belied the pent-up hopes for reflation later this year.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.293% fell 1.1 basis points to 1.286%, after hitting an intraday high of 1.316%. The 2-year note rate TMUBMUSD02Y, 0.108% was steady at 0.107%, while the 30-year bond yield TMUBMUSD30Y, 2.083% rose 0.9 basis point to 2.076%.
What’s driving Treasurys?
U.S. bond markets were at a crossroads, as traders were unsure how much higher they could nudge yields as economic growth and inflation expectations had yet to make their way into the data.
Indeed, economic data on Thursday underlined the continuing struggles of the U.S. labor market during the pandemic. U.S. claims for unemployment benefits rose to a four-week high of 861,000 in the week ending Feb. 13, up from a revised 848,000 in the prior week.
Housing starts last month fell 6% to run at an annualized pace of 1.58 million, and building permits ran at a pace of 1.88 million. Meanwhile, the Philadelphia Fed manufacturing index fell to 23.1 in February from 26.5 in the previous month.
An auction for 30-year Treasury inflation-protected securities saw poor demand on Thursday, but analysts said investors were showing fatigue from taking down record-large Treasury auctions month after month.
What did market participants say?
“Is the market trying to flesh out a new range? That’s probably going to be the case until someone for some reason tries to stop the bleeding,” said Steve Feiss, managing director of fixed income at Etico Partners, in an interview.
Feiss also noted yields had risen to a point where Asian institutional investors were starting to take note of U.S. Treasury market’s relative attractions over European government bonds.
