U.S. Treasury yields were mostly lower on Friday after a wild week that saw a dramatic spike across different time maturities.
The Yield on the 2-year Treasury bond was down less than 1 basis point to 3.869%. The yield climbed above 3.9% earlier in the day, a level it had not seen since Nov. 1, 2007. The 2-year Treasury is highly sensitive to policy decisions as it is widely recognized as in indicator of how investors think central bank policy will develop in the near future.
The yield on the 10-year Treasury was down slightly at 3.453%. The yield on the 30-year Treasury rose nearly 4 basis points to 3.519%.
Yields move opposite to prices. One basis point is equivalent to 0.01%.
Treasurys
The yield curve has jumped up across the board this week after a hotter-than-expected inflation report on Tuesday. The persistent price increases have led investors to expect the Federal Reserve to hike rates higher and hold them there until inflation falls.
The Fed meets next week. While most expect the central bank to hike by 0.75 percentage points, some analysts say the Fed could increase interest rates by a full point, or 100 basis points. That would be the biggest rate hike in 40 years.
The rise in yields has made fixed income more attractive to income-focused investors, but the inverted curve has added a reason for caution.
"Although yields being much higher is making fixed income look more attractive, at the same time we're still faced with an inverted yield curve. Making that duration decision is not very attractive. We're still favoring the short end of the curve," said Jake Jolly, senior investment strategist at BNY Mellon Investment Management.