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Benchmark yields at 2-week highs after China rate cut

Government bond markets sell off, bond rout continues German bund
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U.S. Treasury debt yields jumped on Friday, taking benchmark 10-year note yields to a two-week high, after China cut interest rates for the sixth time in less than a year and helped fuel a global rally in equities.

The People's Bank of China said it was lowering its one-year benchmark bank lending rate by 25 basis points to 4.35 percent as part of China's most aggressive monetary-easing policy since the 2008-2009 global financial crisis.

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Sobering economic data in the third quarter outlined the formidable challenges faced by Chinese policymakers, not least in attaining the 7 percent growth target set by the government.

China's easing announcement, coming just a day after the European Central Bank signaled it is ready to increase its stimulus measures, helped lift stock markets in Asia and Europe. The MSCI world equity index, which tracks shares in 45 nations, rose nearly 1 percent.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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Wall Street was up smartly in early trading, while Treasurys and other top-drawer bonds were falling in price.

"It is a pretty good risk-on move," said Donald Ellenberger, strategist and portfolio manager at Federated Investors in Pittsburgh. "And ordinarily, in risk-on moves, risk-free Treasurys suffer."

The benchmark 10-year Treasury yield last stood at 2.08 percent after touching a high of 2.098 percent, a level last seen on Oct. 9. Its price was last off 15/32.

Yields on the 30-year Treasury bond were as high as 2.93 percent before easing to 2.90 percent, reflecting a price decline of 23/32.

Shorter-term Treasurys, including the five-year note , were also off in price. The five-year was last yielding 1.39 percent on a price drop of 8/32, according to Reuters data.