U.S. Treasury yields were higher on Monday after struggling to unwind the big rally in government debt from weaker-than-expected economic data last week, while traders awaited Federal Reserve Chair Jerome Powell’s congressional testimony and a fresh slew of labor-market data due later this week.
What happened
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
rose 7.5 basis points, climbing to 4.606% on Monday, from 4.531% last week. It was the largest one-day yield advance for the 2-year note since Feb. 16, according to Dow Jones Market Data. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was up 3.8 basis points at 4.218%, from 4.180% on Friday. It snapped a three-day streak of falling yields, according to Dow Jones Market Data. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
gained 2.8 basis points, advancing to 4.354% from 4.326% on Friday. Monday’s climb was the largest one-day gain for the 30-year bond yield since Feb. 26.
What drove markets
On Friday, data released by the Institute for Supply Management showed deteriorating activity, as consumer sentiment slipped, triggering a 7-basis-point decline in the 10-year Treasury yield and an even bigger decline in the 2-year yield.
See: February job report and Powell’s visit to Capitol Hill are on investors’ radar this week
However, Atlanta Fed President Raphael Bostic said Monday that with the labor market strong and growth above trend, there isn’t pressure on the U.S. central bank to cut interest rates.
“The good news is the labor market and economy are prospering, furnishing the FOMC the luxury of making policy without the
pressure of urgency,” Bostic said in a new essay posted on his regional bank’s website.
Later this week, investors will brace for remarks from the Fed Chair Powell, who is expected to deliver monetary-policy updates to the House of Representatives on Wednesday and to the Senate on Thursday, as well as a fresh batch of economic data that could provide hints about the state of the economy.
Dave Sekera, chief U.S. market strategist at Morningstar, said Powell’s inflation expectations, his view on the economy and “any commentary on the soundness of regional banks” in light of their commercial real-estate exposure would be areas he would like to hear more details on during Powell’s testimony.
That’s why a focus this week is also on the all-important nonfarm payrolls data for February, due out on Friday at 8:30 a.m. Eastern time, given that labor-market strength is one of the Fed’s main considerations for the interest-rate path in 2024.
“Job growth likely moderated in February after an unexpectedly-strong 353,000 jobs added in January, which surprised to the upside considering that winter weather disrupted consumer spending and housing activity during the month,” said Bill Adams, chief economist at Comerica Bank, in emailed commentary on Monday.
Meanwhile, the employment rate is likely to edge higher in February on an increase in labor-force participation, Adams said.
