Yields, which move inversely to bond prices, had already touched new highs on Wednesday and 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 4.075%, about eight basis points higher on the day. Two-year yields , which are more closely linked to monetary policy expectations, touched an intra-day high of 4.944% - 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 4.023%. Expectations that the U.S. central bank may need to raise rates by 50 basis points at its next meeting this month stood at about 30%, according to CME Group data. The probability that the Fed's policy rate, currently set in the 4.5% to 4.75% range, could go up to a 4.75%-5%% range was about 70%, instead. "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. Atlanta Federal Reserve President Raphael Bostic, however, said on Thursday he favored quarter-point rate increases, as the impact of higher rates must still be fully felt by the economy.
March 2 Thursday 3:00PM New York / 2000 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.7325 4.8557 -0.011
Six-month bills 4.9325 5.1422 -0.014
Two-year note 99-122/256 4.9038 0.015
Three-year note 98-58/256 4.6484 0.038
Five-year note 98-140/256 4.3267 0.062
Seven-year note 98-136/256 4.2449 0.077
10-year note 95-84/256 4.0754 0.079
20-year bond 95-36/256 4.2381 0.073
30-year bond 93-24/256 4.0237 0.071
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 19.75 0.00
spread
U.S. 5-year dollar swap 8.25 -0.25
spread
U.S. 10-year dollar swap 1.00 0.00
spread
U.S. 30-year dollar swap -39.50 -0.50
spread
(Reporting by Davide Barbuscia; Editing by Andrea Ricci and Deepa Babington)
Messaging: davide.barbuscia.reuters.com@reuters.net))