10-, 30-year Treasury yields on path toward establishing fresh multiyear highs

Long-end Treasury yields jumped on Monday, on the way toward setting fresh multiyear high,s as traders continued to absorb the Federal Reserve’s higher-for-longer theme in interest rates.

What’s happening

  • The yield on the 2-year Treasury
    was 5.118%, down slightly from 5.123% on Friday. Yields move in the opposite direction to prices.

  • The yield on the 10-year Treasury
    was 4.515%, up 7.7 basis points from 4.438% on Friday. The 10-year yield was heading for its highest closing level since Oct. 17, 2007.

  • The yield on the 30-year Treasury
    was 4.622%, up 10.1 basis points from 4.521% on Friday. The 30-year rate was on its way toward the highest closing level since April 11, 2011.

What’s driving markets

Long-end Treasury yields surged on Monday as the Fed’s higher-for-longer mantra on rates continued to reverberate across asset classes. U.S. stocks opened lower and struggled for momentum in morning trading, while the ICE U.S. Dollar Index
jumped 0.3%

The data highlight of this week comes on Friday with the release of the Fed’s favorite inflation gauge, known as the PCE, for August. Ahead of that, investors are wrestling with a growing list of risks, including a possible government shutdown.

Read: Stock investors face a wall of worry into year’s end, creating the need for protection

This week, the Treasury Department auction schedule includes the sales of $48 billion in two-year notes, $49 billion in five-year notes, and $37 billion in 7-year notes.

What analysts are saying

“U.S. stocks are lower as global bond yields shift higher on fears that central
​banks will follow the Fed’s lead and keep rates higher over the long-term,” said Edward Moya, senior market analyst for the Americas at OANDA Corp., in a note.

“Inflation flare up risks are growing and that still suggests the Fed might have to do more tightening despite the trajectory of the economy,” Moya wrote. ​

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