Yields, which move inversely to bond prices, had already touched new highs on Wednesday and they climbed further on Thursday. "The march higher has been relentless and each incremental data point is just helping the momentum continue," said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. "In addition to the very tight labor data ... we also have unit labor costs coming in hotter than expected, so if wage inflation is also ticking back up, combined with broader inflation ticking back up, that is in essence spooking the bond market that inflation is getting more entrenched," he said. Benchmark 10-year yields were trading above 4% on Thursday and were last seen at 4.057%, their highest since November. Two-year yields , which are more closely linked to monetary policy expectations, were last seen at 4.928% - an over 15-year high. On the long end, 30-year bond yields also broke above 4% for the first time since mid-November last year, and were last seen at 4.009%. Expectations that the U.S. central bank may need to raise rates by 50 basis points at its next meeting this month increased marginally on Thursday, according to CME Group data, though the consensus remained for a 25 bps hike. The probability that the Fed's policy rate, currently set in the 4.5% to 4.75% range, could go up to a 5%-5.25% range this month stood at about 34%, up from about 30% on Wednesday. "The economy is still looking robust and that should keep the Fed’s hawkish speak going. Rates will undoubtedly be higher for longer, but the risks of larger than quarter-point rises may be back on the table," Edward Moya, senior market analyst at OANDA, said in a note.
March 2 Thursday 9:57AM New York / 1457 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.7425 4.8661 -0.001
Six-month bills 4.9475 5.1583 0.002
Two-year note 99-110/256 4.9289 0.040
Three-year note 98-50/256 4.66 0.050
Five-year note 98-144/256 4.3232 0.058
Seven-year note 98-156/256 4.2318 0.064
10-year note 95-120/256 4.0576 0.062
20-year bond 95-80/256 4.2249 0.060
30-year bond 93-84/256 4.0095 0.056
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 33.75 -0.50
spread
U.S. 3-year dollar swap 19.25 -0.50
spread
U.S. 5-year dollar swap 7.75 -0.75
spread
U.S. 10-year dollar swap 0.75 -0.25
spread
U.S. 30-year dollar swap -39.50 -0.50
spread
(Reporting by Davide Barbuscia; Editing by Andrea Ricci)
