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Bond Report: Treasury yields stay mostly lower Friday’s ahead of U.S. consumer price index report

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Most U.S. Treasury yields remained lower on Thursday as major-stock indexes experienced uneven trading, with the S&P 500 and Nasdaq Composite indexes relinquishing some ground following three straight days of gains.

Meanwhile, bond investors are awaiting the U.S. November consumer-price index report on Friday and a Federal Reserve policy meeting next week.

What are yields doing?
  • The 10-year Treasury note yield
    TMUBMUSD10Y,
    1.490%

    was at 1.485%, down from 1.508% on Wednesday at 3 p.m. Eastern Time.
  • The 30-year Treasury bond rate
    TMUBMUSD30Y,
    1.874%

    was at 1.866%, compared with 1.874% a day ago.
  • The 2-year Treasury note
    TMUBMUSD02Y,
    0.679%

    yields 0.680%, up from 0.677%.
What’s driving the market?

Treasurys dated three years and out were seeing some modest buying on Thursday, nudging prices higher and most yields lower, as the S&P 500 and Nasdaq Composite gave up some ground and Dow industrials
DJIA,
+0.29%

turned higher in midday trade. The recent moves came after a bout of stock selling last week on fears the omicron variant of the coronavirus would slow the economy.

Yields for government debt are still comparatively low historically ahead of a report on U.S. consumer inflation on Friday, which could provide the spark for a fresh move in fixed income.

Read: Traders see next U.S. CPI reading close to 7% as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot

Data released on Thursday showed that weekly U.S. jobless claims sank to a 52-year low of 184,000  in the week after the Thanksgiving holiday, reflecting great reluctance by companies to lay off workers during the biggest labor shortage in decades. The surprisingly big decline stemmed largely from holiday-related quirks in the data and is somewhat exaggerated.

Economists polled by Dow Jones on average had estimated an increase of 211,000 in initial jobless claims for the week ended Dec. 4, after last week’s claims came in at 222,000.

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Meanwhile, an updating reading of U.S. wholesale inventories for October showed a rise of 2.3%, versus economists’ median estimate of 2.2%.

In other developments Thursday, a $22 billion auction of 30-year Treasury bonds came in “weak,” according to BMO Capital Markets strategist Ben Jeffery.

Earlier in the day, a decision by Fitch Ratings to lower the credit rating of Chinese homebuilder Evergrande HK:3333 had been blamed for some of the softness in risk assets, with the move igniting fresh fears around the Chinese property sector.

What strategists are saying

“Markets have held very tight to the ‘cumulative’ end game for the potential new tightening cycle. And likely for good reason: history is not on the side of successful liftoff. The elimination of emergency asset purchases is long overdue. But the pathway to neutral (2.50%) will not be an easy one despite what the DOT plot may signal next week,” wrote Greg Faranello, head of U.S. rates at AmeriVet Securities, in a daily note.

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