U.S. Treasury yields shifted higher on Wednesday as the bond-market selloff gained pace, following news reports that European Central Bank policymakers were unwilling to intervene to keep government debt yields from rising.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.475% rose 6.4 basis points to 1.479%, after rising as high as 1.495%, while the 2-year note rate TMUBMUSD02Y, 0.140% edged 2 basis points higher to 0.143%. The 30-year bond yield TMUBMUSD30Y, 2.260% climbed 4.6 basis points to 2.261%.
What’s driving Treasurys?
ECB officials saw no need for drastic action to prevent bond yields from rising, as they felt changes to communications or maintaining the flexibility of its pandemic emergency purchase program, according to Bloomberg News.
Jens Weidmann, the governor of the Bundesbank, said the ECB had existing tools to deal with higher rates.
Nonetheless, the perceived shift in tone from the ECB sent U.S. and European government bond yields higher, after some senior ECB policymakers said they were closely monitoring the path of yields last week.
The 10-year German government bond yield TMBMKDE-10Y, -0.290% rose 4.4 basis points to negative 0.297%.
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In U.S. economic data though, Automatic Data Processing Inc. said private-sector payrolls rose by 117,000 in February, below economists’ forecast for 225,000 new jobs.
In other data, the Institute for Supply Management said its index of activity among service-oriented firms such as banks, retailers and restaurants slipped to a nine-month low of 55.3%, from a two-year high of 58.7% in January. Any number above 50% represents an increase in industrial activity.
Meanwhile, the Federal Reserve’s Beige Book is due at 2 p.m. ET.
What did market participants say?
“In what appears to be a backtrack of the recent ECB sentiment on the rise in global rates, European central bankers apparently see ‘no need for drastic action’ to address the situation,” said Ian Lyngen, head of U.S. rates strategy for BMO Capital Markets.
“By walking back the recent mantra of concern, the ECB is bringing into question the central bank’s actual reaction-function to such a swift backup in real yields,” said Lyngen.