U.S. Treasury yields hit highest ranges in additional than three months as jobless claims sink and progress is made on debt-ceiling debate

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US Treasury bond yields rose slightly on Thursday, with 10- and 30-year rates hitting their highest levels since June when stocks rose on a temporary congressional debt limit and a decline in weekly unemployment benefit claims.

What do returns do?
  • The 10-year government bond TMUBMUSD10Y, 1.573%, is yielding 1.570%, its highest since June 7, compared to 1.524% on Thursday based on readings at 3 p.m. Eastern Time, according to Dow Jones Market Data. Debt prices are moving in the opposite direction to yields.

  • The rate on the 2-year Treasury Notes TMUBMUSD02Y, 0.313%, was 0.307%, a new 52-week high, down from 0.296% in the previous session.

  • The 2.132% 30-year TMUBMUSD30Y government bond returned 2.132%, its highest level since June 25, compared with 2.077% on Thursday.

What is driving the market?

Long-term US Treasury bond yields climbed to their highest level in more than three months as stock markets rebounded, aided by news that Washington lawmakers reached an agreement to breach the US debt ceiling and cause national bankruptcy, at least temporarily avert.

The moves on Thursday came when Senate Majority Leader Chuck Schumer, D-New York, said in a speech that top Democrats and Republicans in the chamber “reached an agreement to extend the debt ceiling through early December, and we did hope we can achieve this ”. done today. “The settlement was reached after Senator Mitch McConnell, R-Kentucky, first made an offer.

Yields also rose Thursday on signs of further improvement in the US labor market, compounding the recent surge, fueled by inflation concerns and the soaring price of commodities, including NG00 natural gas and CL.1 oil.

Unemployment benefit claims in the United States fell by 38,000 to 326,000 in the seven days ended October 2, according to government data released Thursday. Economists polled by the Wall Street Journal had estimated new damage would drop to a seasonally adjusted 345,000.

So far, the market has been tense when economists and US Treasury Secretary Janet Yellen warned of an impending default on bonds by the US to their lenders.

Investors will now turn to the US Department of Labor’s September report on Friday’s non-farm payroll report. Economists estimate that an average of 500,000 jobs were created in the past month, with the unemployment rate falling from 5.2% to 5.1%.

What strategists say
  • “Thursday’s sell-off reflected not only a degree of NFP optimism inspired by demands and yesterday’s ADP pressures, but also improved sentiment over the debt ceiling,” writes Ian Lyngen, strategist at BMO Capital Markets, in a press release.

  • “Inflation will peak around the world and remain elevated beyond the short term. Higher inflation usually leads to higher inflation volatility, which drives up term premiums as unresponsive central banks see their credibility and often their currency penalized, ”wrote Javier Corominas, director of macro strategy at Oxford Economics, in a research report on Thursday .

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