US Treasury yields fall

Prices were up and yields fell on US Treasury bonds on Tuesday after four straight days of price declines. Early in the day in New York, yields hit their highest levels in almost two years, with ten-year bonds yielding 4.805 percent and two-year issues at a yield of 4.809 percent. By midday, however, ten-year yields had dropped 1.6 basis points to 4.738 percent. Two-year yields were about the same at 4.775 percent. The price rises came after an attempt to reverse the current yield curve inversion were not successful.

Yields were up in the eurozone and the UK, however. In the eurozone, the two-year Schatz was at it’s highest yield in over three years, rising 13.1 basis points to 3.124. A possible trigger for the large rise in yields was a sale of up to €9 billion in new two-year notes; at such a time, dealers try to push yields as high as possible in order to get good deals on the new bonds. The ten-year Bund also saw yields rise, but at a more modest 1.7 basis points to 3.608 percent.

In the UK, better retail sales figures from February all but put an end to any hope of an interest rate decrease from the Bank of England’s monetary policy committee when it meets this Thursday. This sent yields on the two-year gilt up by 1.3 basis points to 4.412 percent. Ten-year yields rose 1.4 basis points to 4.271 percent.

Meanwhile, yields on Japanese government bonds have gone up due to growing speculation that the Bank of Japan will end its loose monetary policy when it meets later in the week, or at least that it will announce now that the policy will end in April. The ten-year Japanese bond saw yields rise 1.5 basis points to 1.645 percent.

Discuss this in the Finance Markets forums

Story link: US Treasury yields fall