US Treasury yields rise on expectations of Fed rate hike

The returns on Treasury bonds USA rose on Monday in thin trading as investors continued to bet on a 25 basis point rate hike from the Federal Reserve in your meeting of monetary politics next month, following a US jobs report that offset other weak economic data.

Volume was light as many European markets, including the UK, were closed on Easter Monday. Traders in the market said that the volume of Treasuries during the Asian session was around 30% average.

“There is a greater probability of an increase being seen. People are looking at Friday’s non-farm payrolls for nuance.”said Zachary Griffiths, senior investment-grade strategist at CreditSights. “The rise in yields is consistent with our vision of what we expect for the rest of the year. We believe that returns have fallen too fast and the market is pricing in too aggressive rate cuts in the second half of this year.”he added.

The US Nonfarm Payrolls report on Friday showed an increase of 236,000 jobs last month, while February data was revised up to show 326,000 jobs added instead of the previously reported 311,000.

Prior to this data, the rate futures market had bet on a Fed pause at the May meeting. On Monday, the market discounted a 74% probability that an increase in 25 basic points. Yields on 10-year bonds rose 3.4 basic points, to 3.417%. The return to 30 years won 2.5 basic points, to 3.628%.

A closely watched part of the yield curve, which measures the gap between two-year and 10-year bond rates, deepened its investment to -61.4 basis points, but subsequently operated in –59.1 basic points.

The two-year US bond yield, which usually reflects interest rate expectations, rose to 4.006%. (Reporting by Gertrude Chavez-Dreyfuss Editing in Spanish by Ricardo Figueroa)

Source: Reuters