Connect with us
Financial Press
bond-report:-30-year-treasury-yield-sees-biggest-monthly-selloff-since-november-2016
bond-report:-30-year-treasury-yield-sees-biggest-monthly-selloff-since-november-2016

Breaking

Bond Report: 30-year Treasury yield sees biggest monthly selloff since November 2016

Bond Report

U.S. Treasury yields fell Monday as the pace of the debt-market selloff eased after investors rejiggered their bond portfolios at the end of August, a month that saw long-dated rates rise sharply after the Federal Reserve’s change to an average inflation targeting regime.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
0.696%

fell 3.2 basis points to 0.695%, trimming its monthly increase to 15.9 basis points, while the two-year note rate
TMUBMUSD02Y,
0.117%

was virtually unchanged at 0.131%, leaving it up 2 basis points this month.

The 30-year bond yield
TMUBMUSD30Y,
1.466%

slumped 5.4 basis points to 1.454%, paring its monthly increase to 25.6 basis points, its largest such jump since November 2016. Bond prices move inversely to yields.

What’s driving Treasurys?

The momentum from last week’s selloff in Treasurys is cooling as market participants look to buy bonds on the cheap. Before the end of the month, investors will aim to top up on the amount of bonds they hold to keep the maturities of their overall portfolios in line with those of their competing benchmark.

With no major economic data on the docket, investors turned their attention to a speech by Federal Reserve Vice Chairman Richard Clarida, who defended the central bank’s historic shift to an average inflation target of 2%, but did not offer much clarity on what such a policy would look like in action.

Expectations around the policy shift helped to weigh on the prices of long-dated Treasurys last week, the part of the yield curve most vulnerable to the corrosive influence of inflation.

Clarida did, however, tout the possibility of instituting so-called yield-curve control, capping yields for certain maturities.

See: The Fed’s new policy may have just ushered in a new era of uncertainty on Wall Street

What did market participants say?

“Monday’s curve-flattening was certainly consistent with a large month-end duration extension need,” said Ian Lyngen, head of U.S. rates strategy, referring to how longer-dated yields fell much more than their shorter-term peers.

Written By

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Breaking

Market Extra Published: Sept. 17, 2020 at 3:41 p.m. ET MarketWatch photo illustration_iStockphoto The spooky-sounding quadruple witching gets a lot of fanfare in the...

Breaking

Ray Dalio certainly is no radical idealist, but in his frequent writings and media appearances the veteran investor consistently calls for Americans to rewrite...

Breaking

Published: Sept. 17, 2020 at 3:32 p.m. ET Pelosi continues to insist keeping the government open and finding a fiscal stimulus deal are on...

Breaking

Futures Movers Published: Sept. 17, 2020 at 3:20 p.m. ET JMMC recommends extension of output-cut compensation mechanism to the end of the year Getty...