U.S. Treasury yields edged higher on Monday, struggling to unwind the big rally in government debt from weaker-than-expected economic data last week, while traders awaited Federal Reserve Chair Jerome Powell’s congressional testimony and a fresh slew of labor-market data due later this week.
What’s happening
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was up 5 basis points, to 4.585% on Monday, after falling 15.6 basis points last week to settle at 4.531%. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was rising 4 basis points, to 4.218%, from 4.180% last week. Friday’s level was the lowest for the 10-year yield since Feb. 12, according to Dow Jones Market Data. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was advancing 4 basis points, to 4.365%, from 4.326% on Friday.
What’s driving markets
On Friday, data released by the Institute for Supply Management showed deteriorating activity, as consumer sentiment slipped, triggering a 7-basis-point decline in the 10-year Treasury yield and an even bigger decline in the 2-year yield.
See: February job report and Powell’s visit to Capitol Hill are on investors’ radar this week
This week, investors are bracing for remarks from the Fed Chair Powell, who is expected to deliver monetary policy updates to the House of Representatives on Wednesday and to the Senate on Thursday, as well as a fresh batch of economic data that could provide hints about the state of the economy.
That’s why a key focus this week is also on the all-important nonfarm payrolls data for February, due out on Friday at 8:30 a.m. Eastern time, given that labor-market strength is one of the Fed’s main considerations for the interest-rate path in 2024.
“With seasonal adjustment and weather-related payback to deal with, we think the markets are likely to take the [nonfarm payrolls] number with a grain of salt absent a material surprise in either direction,” said strategists at BNP Paribas.
