TREASURIES-US yields hit new highs in wake of March jobs report
Oggi 16:40 - RSF
(Updates yields, adds analysts, context)
By Davide Barbuscia
NEW YORK, April 8 (Reuters) - U.S. Treasury yields rose on Monday as investors continued to question how deeply the Federal Reserve will be able to cut interest rates this year after a strong March jobs report last week.
Yields, which move inversely to prices, moved higher across the curve, hitting the most since November.
Benchmark 10-year yields
were last at 4.421%, two-year yields at 4.776%
and, further out, 30-year yields
were at 4.559%.
Traders in fed fund futures were betting on a total of 62 basis points of rate cuts this year, down from 150 basis points in January. The prospect of a first 25 basis point cut in June had a 51% probability, down from 57% a week ago, CME Group data showed.
"Treasuries were under pressure during the overnight session as the market continues to ponder whether the Fed will have the convincing evidence needed to cut policy rates," analysts at BMO Capital Markets wrote in a note.
"Friday’s employment report offered little to suggest (Fed Chair Jerome) Powell should have urgency to begin the normalization process," they added.
Part of the move higher in yields was also due to hedge fund credit investors selling in order to buy more protection in case of a further rise in yields, said Tom di Galoma, co-head of global rates trading at BTIG.
"I think credit funds have been the biggest sellers, re-hedging their interest rate risk," he said.
Going forward, a move higher in benchmark 10-year yields to 4.5%-4.55% would be a level at which buyers would likely come in, he added.
This week, investors will be looking at the Consumer Price Index for March, which will be released on Wednesday, to further assess the chances of rate cuts this year.
Meanwhile, the Treasury will auction three-, 10- and 30-year paper on Tuesday, Wednesday, and Thursday, respectively, potentially adding further pressure on bond prices.
A rebound in year over year headline inflation in March "could prompt a reprise of the 'what’s the rush?' chorus from Fed officials and others," David Kelly, chief global strategist at J.P. Morgan Asset Management, said in a note.
Barclays strategists wrote in a note that they remained short 10-year Treasuries.
"We think that any easing cycle in response to lower inflation should be shallower than priced in, as the U.S.
economy is clearly doing fine with high real rates," they said.
