The yield of 3-month Treasuries, which could be among the securities most affected by a standoff over the U.S. debt limit, jumped 7 basis points to 5.13%, slightly below the 16-year high reached earlier this month.
Longer-duration Treasury yields, however, fell across the board as shares of First Republic Bank dropped after the company reported a more than $100 billion plunge in deposits in the first quarter, increasing fears that Wall Street has not seen the last of the regional banking crisis.
Consumer confidence, meanwhile, unexpectedly fell to a nine-month low in April, increasing market concerns about a recession.
"As the data become softer, it’s bringing us closer to the most forecasted recession in our lives," said Jim Schaeffer, global head of leveraged finance for Aegon Asset Management. "Once the market is confident about when the Fed is going to pause and how long they will keep rates at the same level, it will be less concerned about the debt ceiling." The Federal Reserve is widely expected to raise benchmark interest rates by another 25 basis points at its policy meeting next week. The yield on 10-year Treasury notes was down 11.2 basis points to 3.403%, while the yield on the 30-year Treasury bond was down 8.8 basis points to 3.641%.
Bond yields move in the opposite direction of prices.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at -61.3 basis points.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 13 basis points at 4.014%.
April 25 Tuesday 10:51AM New York / 1451 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.9975 5.1325 0.072
Six-month bills 4.805 5.0067 -0.045
Two-year note 99-191/256 4.0118 -0.132
Three-year note 100-40/256 3.6936 -0.140
Five-year note 100-176/256 3.4716 -0.133
Seven-year note 101-44/256 3.4332 -0.125
10-year note 100-208/256 3.4014 -0.114
20-year bond 101-168/256 3.7554 -0.099
30-year bond 99-192/256 3.6386 -0.090
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 25.50 -1.75
spread
U.S. 3-year dollar swap 17.25 -1.25
spread
U.S. 5-year dollar swap 7.25 -0.25
spread
U.S. 10-year dollar swap -0.50 0.00
spread
U.S. 30-year dollar swap -41.25 -0.25
spread
(Reporting by David Randall; Editing by Tomasz Janowski and Jonathan Oatis)
Messaging: david.randall.thomsonreuters.com@reuters.net))