US Treasury yields reversed Monday morning, with investors remaining focused on Federal Reserve policy ahead of the latest central bank meeting minutes later in the week.
The yield on the 2-year Treasury yield rose less than a basis point to 2.4384 at 4:25 am ET, while the benchmark 10-year Treasury bond rose 1 basis point to 2.386%. The yield on the 5-year Treasury rose less than a basis point to 2.5553% and the 30-year Treasury rose 2 basis points to 2.4499%. Yields move inversely with prices and 1 basis point equals 0.01%.
2-year and 10-year yields, which form the bulk of the yield curve watched by traders, reversed again on Monday. Those Treasury yields reversed for the first time since 2019 on Thursday and did so again on Friday after closely watched jobs data was released.
The Bureau of Labor Statistics reported Friday that 431,000 nonfarm jobs were hired in March, with an unemployment rate of 3.6%. Economists polled by Dow Jones had forecast 490,000 jobs to be added last month, with an unemployment rate of 3.7%.
The reversal in yields after this report hints at investor concerns that strong economic data could give the Fed the green light to proceed with its plans for a more aggressive rate hike. There are fears that these rate hikes could slow economic growth.
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5-year and 30-year government bond yields also remained inverted after reversing for the first time since 2006 a week ago.
Treasury yield inversions have historically occurred before recessions, although economists have cautioned that this is no guarantee of an economic downturn.
Investors’ focus this week will be on the minutes of the last Fed meeting, which is scheduled for 2pm ET on Wednesday.
ING strategists said in a note on Monday that they expect the Fed to announce 50 basis point rate hikes at the May, June and July meetings.
“This should continue to push yields higher across the board, but also continue to invert the curve,” they said.
Factory order dates will be released on Monday, February at 10:00 am ET.
Investors continue to monitor developments in the Russia-Ukraine war. Russia’s chief negotiator Vladimir Medinsky said talks on the draft peace deal would resume on Monday, stressing that the Kremlin’s position on Crimea and Donbass remains unchanged.
Ukrainian President Volodymyr Zelenskyy has accused Russian forces of genocide and said the Ukrainian people are being “destroyed and exterminated”.
Auctions are scheduled to take place Monday for $57 billion in 13-week bills and $48 billion in 26-week bills.
— CNBC’s Jesse Pound and Sam Meredith contributed to this market report.