Bonds

10-year Treasury yield touches 2.94%, a level not seen since late 2018

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Where this bond investor is looking amid interest rate rises and higher yields

U.S. Treasury yields rose Tuesday, as traders fret over concerns of rising inflation and tighter monetary policy.

The yield on the benchmark 10-year Treasury note rose 8 basis points to 2.942% in afternoon trading. The yield on the 30-year Treasury bond rose more than 4 basis points to trade at 2.995%, and broke above 3% earlier in the session. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasurys


Concerns around rising inflation and its effect on economic growth has seen investors sell out of bonds over the past couple of months, pushing up yields.

Data released last week showed consumer and producer prices continued to rise in March, fueling investor beliefs that the Federal Reserve could increase the size of its interest rate hikes, in a bid to control this inflation.

St. Louis Fed president James Bullard told CNBC's Steve Liesman on Monday that "quite a bit has been priced in" in terms of Fed actions but didn't rule out using a 75-basis-point hike.

But the latest leg of the move up in yields in recent weeks has come even as market expectations for inflation have stayed relatively constant, according to Deutsche Bank's Jim Reid.

"Pretty much all the move has been real yields as 10yr breakevens have been stuck in a relatively tight 2.8-3.0% range over this period," Reid said in a note to clients.

The Russia-Ukraine war has exacerbated pricing pressures. The World Bank said Monday that it had cut its annual global growth forecast for 2022 from 4.1% to 3.2%.

The Ukrainian military says Russia's long-expected offensive push into eastern Ukraine has started, with intensified assaults Monday in the Slobozhansky and Donetsk operational districts in the north and east of the country.

In economic news, housing starts and building permits in March came in above expectations, according to estimates from Dow Jones.