Treasury 10-Year Yield Briefly Tops 1.75%, Approaching 2021 High
(Bloomberg) -- The 10-year Treasury note’s yield briefly topped 1.75%, approaching its 2021 high, deepening one of the biggest weekly selloffs in U.S. government debt in years.
The benchmark note’s yield rose as much as 4.6 basis points to 1.751%, within three basis points of last year’s high, reached on March 30. After retreating to around 1.73% it remains about 22 basis points higher on the week, on track for its biggest weekly increase since June 2020.
Treasury yields have climbed this week as investors brace for Federal Reserve policy makers to redouble their efforts to control consumer price inflation, which has persisted longer than they expected. Interest-rate futures have priced in that the first rate hike is possible in March, and minutes of the Fed’s latest meeting released Wednesday showed officials expect to move more quickly to reduce the bank’s debt holdings than in previous episodes. A surge in sales of new corporate bonds this week contributed to the pressure.
“These were a lot of the trades that got beat up last year -- short real rates, a higher peak in fed funds down the road,” said Michael Cloherty, head of U.S. rates strategy at the securities unit of UBS Group AG. “Things looked really extreme from a valuation perspective.”
With the turn of the calendar year providing a fresh start for risk budgets, “people start getting involved again,” he said.
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