Treasury yields jumped Wednesday afternoon as traders sold off U.S. government debt following a weak $16 billion sale of 20-year bonds.
What’s happening
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
rose 3.5 basis points to 4.645% from 4.610% on Tuesday. Yields move in the opposite direction to prices. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
advanced 3.9 basis points to 4.315% from 4.276% on Tuesday. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
rose 3.1 basis points to 4.479% from 4.448% on Tuesday.
What’s driving markets
Treasury’s $16 billion auction of 20-year notes produced “very ugly” results Wednesday afternoon, with dealers stepping in to take a higher-than-average 21.2% of the sale, according to Tom di Galoma, co-head of global rates trading for BTIG in New York.
The auction results triggered an afternoon selloff in government debt ahead of the 2 p.m. Eastern time release of the minutes from the Federal Reserve’s Jan. 30-31 policy meeting.
Analysts will be looking at the extent to which the Fed minutes reflect lingering worry about price pressures, given firmer-than-expected inflation and jobs data that have since encouraged policymakers to push back against a March interest-rate cut.
Fed-funds futures traders are pricing in a 93.5% probability that the central bank will leave interest rates unchanged at between 5.25% and 5.50% on March 20, according to the CME FedWatch tool. The chance of at least a 25-basis-point rate cut by June is seen at 72.3%. The central bank is mostly expected to deliver at least three quarter-point rate cuts by December.
In an interview with SiriusXM that aired on Wednesday and was cited by Bloomberg, Richmond Fed President Thomas Barkin said price pressures in some sectors are still too elevated despite overall improvement in inflation.
