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Indeed, investors are also positioning for Friday's consumer-price index revisions because of what happened a year ago: the update was significant enough to cast doubt on overall inflation progress.
Yields across the maturity spectrum climbed as much as 10 basis points on the day, reaching session highs after the ISM gauge of service-sector activity for January exceeded economist estimates.
The Treasury Department is expected on Wednesday to follow through on its November guidance of a third round of increases in its so-called quarterly refunding auctions of notes and bonds.
Truist sold $3.5 billion of bonds in two parts. The longest portion, an 11-year fixed-to-floating rate security, yields 162 basis points above comparable Treasuries.
Investors are pricing in more than a 50% chance the Fed will lower borrowing costs in March, and expect the central bank's benchmark rate will fall to around 4% by the end of 2024.
Yields dropped across the US curve after data showed job openings fell to the lowest level since March 2021. Concerns about investors being too fast in anticipating policy easing have resurfaced.
But Mary Daly, president of the San Francisco bank, said it's premature to declare victory against inflation and that the central bank isn't contemplating rate cuts at all right now.
A $55 billion auction of five-year bonds saw strong demand, following a soft $54 billion sale of two-year notes. Benchmark 10-year yields dropped to around 4.4%.
The bond market recovery has come amid some bouts of wild back-and-forth swings, yet is gaining ground since the Fed left its benchmark policy rate unchanged earlier this month.
Long-dated Treasury yields had reached the lowest levels in more than a month just a day earlier, attributed to investors and traders positioning for the end of the Fed's historically aggressive tightening cycle.
The Wall Street bank recently shifted its bond recommendation to neutral from underweight — for the first time since June 2020 — though has so far stopped short of an overweight call.
Short-end issuance is being closely watched after the Treasury Borrowing Advisory Committee on Wednesday recommended the department skew future issuance toward shorter maturities where liquidity and investor demand is stronger.
Everything from housing to mergers and acquisitions are being upended, especially after 30-year US Treasury bond yields this week punched through 5% for the first time since 2007.
US 30-year yields dropped seven basis points to 4.79%, unwinding part of Thursday's surge that was driven by a somewhat disappointing inflation reading and a weak bond auction.
Treasury yields climbed and stocks edged lower as consumer inflation data bolstered speculation on another Federal Reserve rate hike — even if the central bank decides to pause next month.
The current Treasury yield curve is leading homeowners to pay mortgage rates at least 120 basis points more than they should, equal to an extra $245 a month on a $300,000 loan, their letter said.
While the selloff abated on Wednesday, traders are on high alert for a resurgence in volatility — especially if U.S. non-farm payrolls data on Friday come in stronger than expected.
U.S. stocks ended the day higher and Treasury yields fell Thursday. Federal Reserve Chair Jerome Powell sidestepped investor concerns over the outlook for rates at an event.
The Federal Reserve Bank of New York's gauge of the 10-year term premium became positive on Monday, after having been negative for most of the past seven years, reflecting steep increases in longer-maturity Treasury yields.
Bond traders are bracing for Treasury yields to keep pushing higher after the Fed signaled it's likely to hold interest rates at lofty levels well into next year.
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