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Apr 20, 2018

CNBC | US Treasury yields rise ahead of key Fed remarks,April 19, 2018.

cnbc.com

US Treasury yields rise ahead of key Fed remarks

Thomas Franck, Alexandra Gibbs

The yield on the 10-year Treasury note moved above 2.957 percent Friday, hitting its highest level since January 2014.
The two-year yield hit 2.457 percent, its highest level since Sept. 8, 2008 when the two-year yielded as high as 2.542 percent.
Friday's moves cap a week of rising rates accredited to an easing in geopolitical and trade tensions, rising commodity prices and an uptick in German bund yields.
As of the latest reading, the yield on the benchmark 10-year Treasury note was higher at around 2.958 percent at 3:29 p.m. ET, while the yield on the 30-year Treasury bond was up at 3.144 percent. Bond yields move inversely to prices.
"I am calling this a momentum trade because it has largely been driven by commodity prices," said Kevin Giddis, head of fixed income capital markets at Raymond James. "As we have learned over the last few years, those baskets can rise and fall at any time as certain short-term factors cause spikes in prices, then settle back down into a more 'normal' trading range."
Rising rates can be bad for stocks because at some point higher yielding investments can be more compelling investments. Higher bond yields also mean higher borrowing costs for corporations.
The bond market has also been worried about the idea that rising inflation could push the Federal Reserve to raise interest rates aggressively throughout the rest of the year.
The move upward in long-term yields has also — at least briefly — stalled the steady flattening in the yield curve that's occurred over the past few months. In normal times, the yield curve slopes upward, reflecting a belief in future economic expansion.
However, when short-term interest rates exceed long-term rates, market sentiment suggests that the long-term outlook is worse; an inverted curve is often considered a signal of a pending economic recession.