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Treasury yields rose Friday as investors prepared for what’s expected to be a strong U.S. March jobs report.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.401%
rose to 2.408%, up from 2.324% at 3 p.m. Eastern on Thursday. -
The 2-year Treasury yield
TMUBMUSD02Y,
2.379%
stood at 2.388%, up from 2.284% Thursday afternoon. -
The 30-year Treasury bond yield
TMUBMUSD30Y,
2.504%
rose to 2.516% from 2.444% late Thursday. - The 2-year yield jumped 155.4 basis points in the first quarter, the biggest quarterly gain since June 1984, based on 3 p.m. levels, according to Dow Jones Market Data.
What’s driving the market?
Investors will be watching the release of U.S. March jobs data at 8:30 a.m. It’s expected to show the U.S. economy created 490,000 new jobs last month, according to a poll of economists by The Wall Street Journal, not far below the 582,000 average in the prior three months. The unemployment rate is expected to tick down to 3.7% from 3.8%.
It’s been an eventful week for the Treasury market, with the yield on the 2-year note briefly trading above the 10-year yield on Tuesday — marking a temporary inversion of that measure of the yield curve. Persistent inversions of the 2-year/10-year part of the curve are seen as a recession indicator, albeit with a lag of a year or more.
See: What stock-market investors need to know about the bond market’s recession signal
Investors will also parse a U.S. final March purchasing managers index reading at 9:45 a.m. ET and the Institute for Supply Management’s March manufacturing index at 10 a.m. February consumption spending figures are also due at 10 a.m.
Chicago Fed President Charles Evans is due to speak Friday morning.
What are analysts saying?
The second quarter “has come in like a bear with 10-year yields backing up to 2.437% during the overnight session as the long bond breached 2.50%,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a note. “Even the front-end of the market was weaker with 2s drifting back to 2.412% and leaving the flat-to-inverted 2s/10s curve in place.
“At this stage in the cycle there is only so far that the curve can invert and the zero bound appears to be a meaningful inflection point for 2s/10s,” he wrote. “As the realized rate hikes mount, there is a stronger case for a deeper inversion, but for now we expect the frequency of parallel shifts in the curve to increase; comparable to the overnight price action.”
