Treasury yields lacked direction early Thursday as investors sifted through a raft of tepid U.S. economic data that belied the pent-up hopes for reflation later this year.
What are Treasurys doing?
The 10-year Treasury note yield
was flat at 1.299%. The 2-year note rate
was steady at 0.111%, while the 30-year bond yield
rose 0.8 basis point to 2.077%.
What’s driving Treasurys?
Bond markets were at a crossroads, as traders were unsure how much further they could nudge yields higher 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 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.
What did market participants say?
“Disappointing data has not stopped the curve from steepening in the US or in euro, strong data may equally not halt a bullish re-flattening. Stocks and commodities are the proverbial tail wagging the bond market,” said Kenneth Broux, a strategist at Société Générale, noting the lack of bearish reaction after Wednesday’s stronger-than-expected retail sales.