Bond Yields Rise as 10-Year Yield Hits 5-Month Low

On Thursday, bond yields reversed their direction after the 10-year yield had reached its lowest level in almost five months.

Market Overview

• The yield on the 2-year Treasury was 4.37%, marking a 3.7 basis points increase. (Yields move opposite to prices)
• The yield on the 10-year Treasury was 3.88%, rising by 2.9 basis points. This yield was the lowest since July 26.
• The yield on the 30-year Treasury was 4.01%, increasing by 2.2 basis points.

Market Drivers

The rally in bonds on Wednesday was driven by lower-than-expected U.K. inflation data, despite positive U.S. economic data.

Demand for bonds remained steady even after a disappointing auction of 20-year notes. An auction of $20 billion of reopened 5-year Treasury inflation-protected securities was scheduled for Thursday.

JPMorgan strategists, led by Jay Barry, expressed their expectations for a slight concession to be made in order to smoothly digest the supply, given the recent decline in real yields, the difference between nominal yields and inflation expectations.

In addition to Friday's release of personal consumption expenditure price index data, Thursday will feature weekly jobless benefit claims, the third estimate of third-quarter GDP, the Philadelphia Fed manufacturing index, and the leading economic index, which has been predicting a recession that has yet to materialize.