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Long-dated Treasury yields snap three day rise and drop the most in almost a week ahead of U.S. consumer price report

By Vivien Lou Chen and Mark DeCambre


Long-dated Treasury yields posted their biggest one-day drop in almost a week on Thursday, while major stock indexes besides Dow industrials were lower, ahead of Friday’s U.S. consumer-price index report for November and next week’s Federal Reserve policy meeting.

What are yields doing?

  • The 10-year Treasury note yield TMUBMUSD10Y, 1.495% declined 2.6 basis points to 1.486%, down from 1.508% on Wednesday at 3 p.m. Eastern Time.
  • The 30-year Treasury bond rate TMUBMUSD30Y, 1.908% fell almost 1 basis point to 1.865%, compared with 1.874% a day ago.
  • It was the largest one-day decline for the 10- and 30-year yields since Dec. 3, based on 3 p.m. levels, according to Dow Jones Market Data. Thursday’s moves also snapped a three-trading-day streak of gains for both.

The 2-year Treasury note TMUBMUSD02Y, 0.691% yield rose less than 1 basis point to 0.684, up from 0.677%. It was the yield’s second-highest level of the year.

What’s driving the market?
Treasurys, other than two- and three-year government debt, were seeing some modest buying on Thursday, nudging prices higher and most yields lower as the S&P 500 and Nasdaq Composite gave up some ground and Dow industrials DJIA, +0.55% turned higher in midday trade. The recent moves came after a bout of stock selling last week on fears the omicron variant of the coronavirus would slow the economy.

Yields for government debt are still comparatively low historically ahead of a report on U.S. consumer inflation on Friday, which could provide the spark for a fresh move in fixed income.

Read: Traders see next U.S. CPI reading close to 7% as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot

Data released on Thursday showed that weekly U.S. jobless claims sank to a 52-year low of 184,000 in the week after the Thanksgiving holiday, reflecting great reluctance by companies to lay off workers during the biggest labor shortage in decades. The surprisingly big decline stemmed largely from holiday-related quirks in the data and is somewhat exaggerated.

Economists polled by Dow Jones on average had estimated an increase of 211,000 in initial jobless claims for the week ended Dec. 4.

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Meanwhile, an updated reading of U.S. wholesale inventories for October showed a rise of 2.3%, versus economists’ median estimate of 2.2%.

In other developments Thursday, a $22 billion auction of 30-year Treasury bonds came in “weak,” according to BMO Capital Markets strategist Ben Jeffery.

Earlier in the day, a decision by Fitch Ratings to lower the credit rating of Chinese homebuilder Evergrande HK:3333 had been blamed for some of the softness in risk assets, with the move igniting fresh fears around the Chinese property sector.

What strategists are saying
Markets have held very tight to the ‘cumulative’ end game for the potential new tightening cycle,” wrote Greg Faranello, head of U.S. rates at AmeriVet Securities, in a daily note. “And likely for good reason: history is not on the side of successful liftoff. The elimination of emergency asset purchases is long overdue. But the pathway to neutral (2.50%) will not be an easy one despite what the DOT plot may signal next week.”


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