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Treasury yields climb to start October’s first full week

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U.S. government bond yields were on the rise Monday morning in the first full trade week in October, after rates registered the largest daily declines in months to end last week, despite data showing that U.S. inflation rose again in August and stayed at a 30-year high.

What yields are doing
  • The 10-year Treasury note
    TMUBMUSD10Y,
    1.501%

    yields 1.496%, compared with 1.464% on Friday at 3 p.m. Eastern Time.

  • The 2-year Treasury note
    TMUBMUSD02Y,
    0.281%

    rate at 0.278%, versus 0.264% at the end of last week.

  • The 30-year Treasury
    TMUBMUSD30Y,
    2.076%
    ,
    aka the long bond, yields 2.074%, compared with 2.037% on Friday.

What’s driving the market?

Yields were edging up as investors were looking ahead to the monthly jobs report for September due on Friday but before then investors will parse data on factory orders for August due at 10 a.m. ET.

Economists surveyed by Econoday estimate on average that factory orders rose 1%, compared with a 0.4% rise in the previous month.

Investors have been broadly observing developments in Washington, D.C., including the negotiations on infrastructure spending and social spending as Democrats debate whether to reduce proposed programs or cut their duration to reduce a multitrillion-dollar social spending package.

Meanwhile, investors continue to eye developments with highly indebted Chinese property development company Evergrande for any possible signs of spillover into other parts of the debt and equity markets globally.

Looking ahead, investors were expecting to hear from St. Louis Fed President James Bullard at 10 a.m. Eastern, as a part of a panel discussion on “Mastering the Economic Recovery.”

What analysts say

“We see bond yields gravitating higher over time as the Covid-inspired inflation lift helps inflation settle at higher levels than we have seen in the recent past,” wrote Steve Barrow, head of G-10 strategy at Standard Bank, in a Monday research note.



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