The performance of the Treasury bond US 10-year bond, the pillar of the global financial system, was headed on Friday towards its biggest weekly rise since April 2022, after a brutal week of selling in the stock market. public debt.
The 10-year yield, which moves inversely to the price, briefly surpassed the 5% barrier on Thursday for the first time since July 2007, touching 5,001%. On Friday it fell 4 basis points (bp), to 4.945%, but is still on track to register a weekly increase of more than 30 bp, the largest since April of last year.
A liquidation sale of global bonds led by USA picked up pace on Thursday after Federal Reserve Chairman Jerome Powell He said the strength of the U.S. economy could require tougher lending conditions to control inflation, although rising market interest rates could do the central bank’s job.
“It adds even more clouds to the outlook now that the Fed “is willing to outsource its monetary tightening”said Lyn Graham-Taylor, senior rates strategist at European lender Rabobank. “I think that made some people throw in the towel a little bit,” he added. “There is no reason why Treasury yields can’t rise.”
The two-year Treasury yield fell 1 basis point to 5.161%, after reaching its highest level since 2006 on Thursday, at 5.259%.
The cause of the massive bond sell-off has been a American economy which is exceeding all expectations even though the Fed has raised the cost of credit to the 5.25% to 5.5% range.
Weekly jobless claims fell to their lowest level in nine months last week, data showed on Thursday, underscoring the strength of the US economy two days after retail sales figures were much stronger than the expected.
The 30-year return fell 3 basis points, to 5.073%. On Thursday they reached 5,119%, a maximum since 2007.
The gap between the performance of Treasury bond at two years and at 10 years, closely watched, fell on Friday about 5 basis points, to -21.2 basis points.
The yield curve has inverted less in recent months and on Thursday hit its lowest level since September 2022, at -16.23 basis points.
Source: Gestion
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