Bond yields eased Friday ahead of key comments from Federal Reserve officials, as traders increasingly price in the prospect that the central bank will continue its rate-hike campaign next month.
What’s happening
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.246%
was 4.23%, down 3.7 basis points. Yields move in the opposite direction to prices. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.644%
was 3.63%, down 2.5 basis points. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.908%
was 3.9%, down 1.1 basis points.
What’s driving markets
On Thursday, the 2-year yield saw its largest yield gain since May 5, as the 10-year yield also rose. That came after a flurry of hawkish Fed speakers, as well as better-than-expected economic data and indications the U.S. debt ceiling will be raised.
Fed Chair Jerome Powell is due to step up to the mic at 11 a.m. Eastern — in a conversation with former Fed Chair Ben Bernanke. New York Fed President John Williams is due to make remarks as well.
Markets are pricing in a 36% chance of a quarter-point hike in June, up from just 16% a week ago, according to the FedWatch tool from the CME.
“We’ll hear from Fed Chair Jerome Powell and he will probably have some interest in keeping a hawkish rhetoric alive, ultimately adding a bit more pressure on bonds and support to the dollar,” said Francesco Pesole, a currency strategist at ING.
