Treasury yields moved lower Tuesday to kick off February, as investors awaited a closely watched gauge of labor-market tightness and continued to assess how fast and far the Federal Reserve will raise interest rates.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.747%
was at 1.753%, down from 1.778% at 3 p.m. Eastern. Yields and debt prices move opposite each other. -
The yield on the 2-year note
TMUBMUSD02Y,
1.149%
was 1.157%, compared with 1.163% on Monday afternoon. -
The 30-year Treasury bond yield
TMUBMUSD30Y,
2.076%
pulled back to 2.076% from 2.097% late Monday. - The 2-year note yield rose 43.3 basis points in January for the biggest monthly jump since December 2009, according to Dow Jones Market Data. The 10-year yield jumped 28.4 basis points in January, while the 30-year yield increased by 20.9 basis points — the largest increases for both maturities since March.
What’s driving the market?
Treasurys are showing signs of stability after a volatile January that saw the 10-year yield surge to a two-year high around 1.9% before pulling back. Investors are preparing for the launch of a cycle of rate increases by the Federal Reserve, which signaled at its January meeting that liftoff will likely come in March. Officials have also pointed to a potentially quicker start to the wind-down of the central bank’s balance sheet compared with the last tightening cycle once rate increases begin.
Investors face a busy week of labor data, including the December Job Openings and Labor Turnover Survey, or JOLTS, report at 10 a.m. Eastern. Automatic Data Processing’s estimate of January private-sector job creation will come Wednesday, while the Labor Department’s official January jobs report is set for Friday.
Also Tuesday, IHS Markit’s manufacturing purchasing managers index is set for release at 9:45 a.m. The Institute for Supply Management’s closely watched January manufacturing index is due at 10 a.m., along with a government reading on December construction spending.
What are analysts saying?
“The U.S. releases manufacturing ISM, and JOLTS data today but the Fed’s message has been so clear that softer data may go on being ignored,” said Kit Juckes, global macro strategist at Société Générale. “However, with so much priced into the U.S. curve, there’s less to hurt risk sentiment now,” he said, noting that SocGen’s proprietary sentiment indicator has turned marginally higher.
