The 10-year benchmark barely budged near 5.273% after brushing a level last seen in 2002 during the previous session. The 30-year yield slipped a bit more than 2 basis points to 5.636% after trading just short of a 24-year peak on Wednesday. Shorter maturities ticked up, with the 2-year adding a little over 2 basis points to 4.791%. For context, a basis point is 0.01%, and bond prices move opposite to yields.
A snapshot of the curve showed: 1-month at 3.96% (+0.018), 3-month at 4.153% (+0.012), 6-month at 4.318% (+0.031), 1-year at 4.439% (+0.027), 2-year at 4.777% (+0.013), 10-year at 5.25% (-0.027), and 30-year at 5.616% (-0.045).
Speaking in Istanbul at a Central Bank of Turkey forum, Fed Governor Christopher Waller said inflation's roughly five-and-a-half-year stretch above the 2% goal means additional tightening is still on the table, though he indicated the next step does not have to come right away. "The hikes do not need to come at consecutive meetings," he said. "But they should be in place in an acceptable period of time."
That followed the September meeting minutes, which indicated policymakers expect to deliver another increase before year-end to keep inflation in check. Traders are leaning toward the Fed holding rates steady on Oct. 28 and then moving to lift them on Dec. 9.
The ten-year yield sits underneath mortgage rates and equity valuations alike. Market Briefs covers the bond market free every weekday.
Investors looked ahead to a third sale this week, scheduled after midday Thursday, with the Treasury set to offer $22 billion in 30-year bonds. That follows a $58 billion 3-year auction on Tuesday and a $39 billion 10-year sale on Wednesday.
Demand in the 10-year was notable: global central banks accounted for more than 80% of the takedown, topping the 72.4% auction average. BMO Capital Markets' Ian Lyngen wrote that the 10-year auction "has set the tone for the Treasury market - at least for the moment," and noted bidders showed up even though it was the richest-yielding 10-year auction since November 2000. He added that Thursday's long-bond sale will be the next read on appetite for U.S. debt amid worries about deficits worldwide.
Weekly jobless claims came in lighter than forecast. Initial claims totaled 197,000 for the week that ended Oct. 3, a decline of 2,000 from the prior week and less than the 200,000 projected by Dow Jones-surveyed economists. Put the pieces together - a Fed that still leans hawkish, strong participation in long-duration auctions, and resilient labor data - and you have a backdrop where long-term borrowing costs stay in focus. If you care about the interest rate on your mortgage, savings account, or future bond returns, this is the stuff to watch.
A steady yield amid conflicting signals is itself informative. Join Market Briefs free and follow the curve.
