Yields on U.S. government debt in 10 and 30 years fell to their lowest levels in the months of Friday, but recorded the largest weekly decline since June 2020 after the report showed disappointment. Did 210,000 jobs Added in November in the face of a serious labor shortage.
The Treasury curve narrowed to levels not seen for more than a year the day after multiple cases of the Omicron variant were detected. New York He asked more questions about the impact of new stocks on the recovery of the global economy.
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What is the yield?
10-year government bond
Yields fell 10.5 basis points to 1.342%, down 10.5 basis points from 1.447% EST on Thursday to the lowest level since September 22, according to Dow Jones market data. As the price of government bonds rises, so does the yield.
30-year Treasury yieldBX: TMUBMUSD30YThe long bond, also known as Longbond, fell 9.3 basis points to 1.675%, the lowest since January 4, based on the 3:00 pm level. It’s the Dow from 1.768% on Thursday.
The 10-year interest rate fell 14.2 basis points that week, and the 30-year yield fell 15.5 basis points, the largest weekly decline since June 12, 2020.
2-year government bond
Yields fell 2.8 basis points from 0.617% a day ago to 0.589%. Still, yields, closely tied to the Fed’s short-term policy rate path, rose 7.1 basis points this week.
What is driving the market?
Last month’s increase in 210,000 new jobs far fell short of Wall Street’s expectations, showing that the worst labor shortages in decades are still a drag on recovery. The economists polled by The Wall Street Journal are: 573,000 new employment.. Meanwhile, the unemployment rate fell from 4.6% to 4.2% as companies hired more aggressively, and the average hourly wage for the 12 months to November rose 4.8%.
Friday’s 2- to 10-year interest rate spreads are below 75 basis points, the narrowest since November 30, 2020, according to Tradeweb data. In addition, the difference between 5-year and 30-year yields narrowed to 55 basis points, a level not seen after March 9, 2020. Such moves usually mean that investors have a weak long-term outlook for the economy.
Analysts say the Fed is unlikely to change its plans to accelerate the reduction of monthly bond purchases at its next meeting of policy makers within two weeks due to slow employment growth. Federal Reserve Chair Jerome Powell and other members of the central bank’s interest rate setting committee may justify a faster taper of asset purchases to counter rising inflationary pressures. I suggested that.
Earlier this week, Powell Surprised market Participants by opening the door to speed up the tapering process when policymakers meet later this month.He also said he wanted to Abolish the word “temporary” When referring to inflation.
Next week, the Fed will enter a media blackout period ahead of its last one in 2021, the 14th to 15th December policy rally.
In another data release on Friday, the final November value for the IHS Markit Purchasing Managers Index for the Services sector was 58, compared to an initial value of 57. Reading service The November value from the Supply Chain Association rose from 66.7 to 69.1. Values above 50 indicate that the situation is improving.And the United States Factory order It increased by 1% in October.
What the analyst is saying
“The seemingly disappointing November US employment report released today did not undermine expectations for short-term monetary tightening in the US,” said senior Oliver Jones. “Economics.” And even if labor market recovery could potentially slow, the Treasury yield curve could be even flatter if policymakers decide to actually push for tightening next year. ”
Regarding 10-year yields, “Our view is that 1.30% are vulnerable during night sessions,” said Ian Ringen, strategist at BMO Captal Markets. On the other hand, “1.68% of people in their thirties look richer before the reversal, but the next 25 bp of long bonds are high, not low.”
Long-term government bond yields have recorded the largest weekly decline since June 2020, as the United States added just 210,000 jobs in November.
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-77C1-D8D74465B753%7D&siteid=rss&rss=1 Long-term government bond yields have recorded the largest weekly decline since June 2020, as the United States added just 210,000 jobs in November.