10-year Treasury retreats below 1.50%, as bonds take breather from selloff

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U.S. Treasury yields pulled back in early Friday trade, offering some respite for market participants grappling with the speed of the bond-market selloff this week.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.481%

fell 4.1 basis points to 1.474%, but still up around 13 basis points from where it ended last Friday, while the 2-year note rate
TMUBMUSD02Y,
0.156%

was unchanged at 0.162%. The 30-year bond yield
TMUBMUSD30Y,
2.233%

slid 7.9 basis points to 2.230%. Bond prices move inversely to yields.

See: 3 reasons the rise in bond yields is gaining steam and rattling the stock market

What’s driving Treasurys?

The bond market looked to find its footing after a speedy selloff this week that sent government debt yields across the world higher.

Fears that an inactive Federal Reserve and brewing reflationary forces could combine to hurt long-dated Treasurys saw investors flee from bonds on Thursday, leading to the 10-year benchmark note’s biggest daily drop since November.

At the same time, equities tumbled on Thursday over concerns higher borrowing costs and yields could sap some of the froth from Wall Street.

Read: So long, there-is-no-alternative trade. What now?

A raft of key U.S. economic data will come out on Friday. January data on personal income and core inflation are due at 8:30 a.m. ET, released alongside an advanced report on trade in goods.

Then, the February Chicago purchasing managers index will be out at 9:45 a.m., followed by the University of Michigan’s consumer sentiment index reading for this month at 10 a.m.

What are market participants saying?

“A further move higher in U.S. yields from here is going to be hard to sustain if it is not substantiated by fundamental considerations. This is owing to the fact that a further rise in borrowing costs that is not accompanied by a brighter outlook for growth and inflation stands to further challenge the lofty valuations of risky assets,” said analysts from Rabobank.



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