By Karen Brettell
NEW YORK, March 30 (Reuters) – Longer-dated U.S. Treasury yields fell on Thursday as investors waited on key inflation data due on Friday and continued to evaluate whether recent stress in the banking sector has been contained.
Treasury yields have stabilized following sharp drops after the collapse of Silicon Valley Bank and Signature Bank this month.
However, “nobody wants to make too big of a move in either direction because we don’t know if another shoe’s going to drop, or if there’s going to be an economic change … are institutions going to pull back from lending? Things like that may push us towards a recession,” said Ellis Phifer, managing director of fixed income research at Raymond James in Memphis, Tennessee.
Personal consumption expenditures (PCE) data on Friday is the next major U.S. economic focus. That is expected to show core prices rose by 0.4% in February and posted an annual increase of 4.7%. USPCEM=ECI, USPCE2=ECI
Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose moderately last week, showing no signs yet that tightening credit conditions were having a material impact on the labor market, which remains tight.
Federal Reserve officials on Thursday noted that inflation remains a problem.
Minneapolis Fed President Neel Kashkari said the U.S. central bank has “more work to do” to get inflation back down to its 2% goal, although he did not say specifically how much further he believes interest rates will need to rise to do the job.
Boston Fed President Susan Collins said it seems likely that the U.S. central bank will raise interest rates one more time this year and added that financial sector stress has likely removed some pressure to go further than that.
Richmond Fed President Thomas Barkin said that he had on what rate increase might be appropriate at the Fed’s May 1-2 session.
Benchmark 10-year yields US10YT=RR fell two basis points to 3.547%. They are up from a six-month low of 3.285% reached on Friday and are holding below a 15-year high of 4.338% on Oct. 21.
Two-year yields US2YT=RR rose two basis points to 4.101%. They are up from a six-month low of 3.555% on Friday but below the almost 16-year high of 5.084% hit on March 8.
The closely watched yield curve between two-year and 10-year notes US2US10=TWEB was last at minus 56 basis points.
Fed funds futures traders are now pricing in a 55% chance of a 25 basis points interest rate increase at the Federal Reserve’s May 2-3 meeting.
March 30 Thursday 3:20PM New York / 1920 GMT
Price
Current Yield %
Net Change (bps)
Three-month bills US3MT=RR
4.695
4.8167
0.044
Six-month bills US6MT=RR
4.69
4.8833
-0.012
Two-year note US2YT=RR
99-146/256
4.101
0.021
Three-year note US3YT=RR
102-12/256
3.8848
0.002
Five-year note US5YT=RR
99-212/256
3.6629
-0.012
Seven-year note US7YT=RR
100-20/256
3.6123
-0.012
10-year note US10YT=RR
99-156/256
3.5469
-0.019
20-year bond US20YT=RR
99-224/256
3.8838
-0.033
30-year bond US30YT=RR
97-224/256
3.7436
-0.034
DOLLAR SWAP SPREADS
Last (bps)
Net Change (bps)
U.S. 2-year dollar swap spread
32.75
0.25
U.S. 3-year dollar swap spread
17.50
0.50
U.S. 5-year dollar swap spread
5.75
-0.25
U.S. 10-year dollar swap spread
-0.75
0.25
U.S. 30-year dollar swap spread
-45.75
1.00
(Reporting by Karen Brettell; Editing by Jonathan Oatis, Will Dunham and Mark Potter)
((karen.brettell@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
