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Treasury yields finished mixed on Friday, with the 30-year rate down for the third straight week, as the market recovered from a bad auction of the longest-dated maturity.
What happened
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The yield on the 2-year Treasury note
BX:TMUBMUSD02Y
rose 3.8 basis points to 5.060% from Thursday’s level of 5.022%, climbing further into its highest level since Oct. 31. For the week, the yield jumped 23.2 basis points, the largest weekly gain since May. -
The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was marginally lower at 4.627% from 4.629% on Thursday. It rose 7 basis points this week. -
The yield on the 30-year Treasury note
BX:TMUBMUSD30Y
dropped 3.2 basis points to 4.733% after factoring in new issue levels. For the week, the rate was down 1.7 basis points. It’s dropped 35.4 basis points over the last three weeks, the largest decline for such a length of time since the period that ended on Dec. 9, 2022.
What drove markets
Calm returned to the government-bond market on Friday, after a poorly-received Treasury auction of 30-year bonds in the prior session that triggered a sharp selloff in long-dated maturities and weighed on stocks.
Traders said Thursday’s auction was likely partially impacted by a ransomware attack against the U.S. arm of the Industrial & Commercial Bank of China this week, with Bloomberg News reporting that the attack caused disruptions across the Treasury market and some transactions failed to clear.
Read: How ransomware attack on ICBC rattled the Treasury market and shook up a 30-year bond auction
Data released on Friday showed that U.S. consumer sentiment fell in November for the fourth month in a row due to worries about higher interest rates and the war in the Middle East.
Also on Friday, Federal Reserve Bank of San Francisco President Mary Daly said she wasn’t sure the central bank has raised interest rates high enough to bring inflation back down to the 2% target. The next major inflation update arrives on Tuesday, with the October consumer price index.
What strategists are saying
“In the week ahead, inflation will once again be in the spotlight with Tuesday’s release of October’s CPI report,” said BMO Capital Markets rates strategists Ian Lyngen and Ben Jeffery.
“With the backdrop of sticky inflation momentum and an unemployment rate that is now 0.5 pp off the cycle lows, the market once again appears to be waiting for the next proverbial shoe to drop,” they wrote in a note.
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