US Treasury Yields Rise After Fed Chairman Powell’s Promise of a Pivot
By On Monday, the US 10-Year Treasury yield (US10Y) rose by 8 basis points to 3.61%, following a 14-basis-point jump on Friday.[0] This brings the 10-year yield up 25 basis points since Wednesday, the day after Federal Reserve Chairman Jerome Powell spoke. The US 2-Year Treasury yield (US2Y) has also risen by 37 basis points since the close on Thursday, including 11 basis points today and 20 basis points on Friday, to 4.41%.[1]
The two-year yield is now above its 100-day moving average, and the 2s10s spread has widened to its most inverted level since the early 80s at -87bp.[2] This suggests that markets are betting on the Fed pushing higher after last Friday's strong jobs numbers. US equities also opened higher but declined through the day, with the S&P500 and NASDAQ both around 0.5-0.7% lower.
Investors have assessed the outlook for inflation and monetary policy based on economic data and comments from Federal Reserve officials.[0] Powell's slumped posture and soft voice, as he struggled to politely answer the same leading questions, has been interpreted as a promise of a pivot.[3]
0. “10-year Treasury yield rises, traders look ahead to key U.S. inflation data” CNBC, 10 Feb. 2023, https://www.cnbc.com/2023/02/10/us-treasury-yields-investors-await-data-fed-speaker-remarks.html
1. “Treasury ETFs slide as yields spike after explosive payrolls report” Seeking Alpha, 6 Feb. 2023, https://seekingalpha.com/news/3932353-treasury-etfs-sink-as-yields-spike-after-explosive-payrolls-report
2. “Mixed messages yet a clear one from bond yields” Forex Factory, 9 Feb. 2023, https://www.forexfactory.com/news/1204870-mixed-messages-yet-a-clear-one-from-bond
3. “Delayed Reaction? 2-Year & 10-Year Treasury Yields Jump, Mortgage Rates Spike 40 Basis Points in Two Days to …” WOLF STREET, 6 Feb. 2023, https://wolfstreet.com/2023/02/06/delayed-reaction-2-year-10-year-treasury-yields-jump-mortgage-rates-spike-40-basis-points-in-two-days-to-6-39
