Bonds

Treasury yields rise, 10-year rebounds to nearly 1.3%

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Key Points
  • There are no major economic releases due out on Wednesday.
  • Auctions are scheduled to be held on Wednesday for $30 billion of 119-day bills and $24 billion of 20-year bonds.

U.S. Treasury yields bounced higher on Wednesday, with the 10-year rate climbing to nearly 1.3% to claw back some of its losses over the past week.

The yield on the benchmark 10-year Treasury note jumped 8 basis points, rising to 1.29% at 2:15 p.m. ET. The yield on the 30-year Treasury bond rose 7 basis points to 1.939%. Yields move inversely to prices and 1 basis point equals 0.01 percentage points.

Treasurys

The move higher comes after Treasury yields sunk at the beginning of the week, with the 10-year rate hitting a five-month low, amid concerns about the rapid spread of Covid-19 variants and rising inflation.

The U.S. has averaged over 35,500 cases of the coronavirus over the last seven days, according to data from the Centers for Disease Control and Prevention, leading to worries that consumer fear or health restrictions could slow the economic recovery.

Edward Moya, senior market analyst at Oanda, said the bond market was experiencing a period of "chaos" amid uncertainty about the next steps from the Federal Reserve with a cloudier economic outlook, and Wednesday's move was an attempt by the market to stabilize itself.

"I think right now you're seeing that the global growth concerns might have exaggerated the collapse we saw in Treasury yields, and that short-covering type of move for the bond market was something that now you're going to see the market reset," Moya said.

In terms of concerns around inflationary pressures, Kleinwort Hambros Chief Investment Officer Fahad Kamal told CNBC's "Squawk Box Europe" on Wednesday that his firm didn't think pricing pressures would get "out of hand."

"We don't think there's going to be anything like high-single-digits sort of inflation," he said, noting that although prices were seeing a bounce right now, they would "moderate and come back to trend next year."

There are no major economic releases due out on Wednesday.

Auctions are scheduled to be held on Wednesday for $30 billion worth of 119-day bills and $24 billion worth of 20-year bonds.