Bond Report: 10-year U.S. Treasury yield flirts with 1.60% before jobs report

United States

U.S. Treasury yields were trading higher on Friday before the February employment report from the Labor Department which is expected to show steady job gains.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 1.573% rose 1.6 basis points to 1.566%, after rising as high as 1.582% in overnight trading. The 2-year note rate TMUBMUSD02Y, 0.144% was flat at around 0.143%, while the 30-year bond yield TMUBMUSD30Y, 2.317% edged 0.2 basis point lower to 2.306%.

What’s driving Treasurys?

Investors will closely eye the Labor Department’s nonfarm employment report, with the U.S. economy forecast to have added 210,000 jobs last month. The unemployment rate is expected to hold at 6.3%, and average hourly earnings to rise 0.2%.

Markets are trying to find their footing after Federal Reserve Chairman Jerome Powell declined to say on Thursday he would push back against the recent rise in long-term bond yields, though he would continue to monitor if turbulence in the Treasurys market translated into tighter financial conditions.

See: Powell says current policy appropriate even as bond market turmoil has caught his eye

His remarks renewed the bond-market selloff this week, sending the 10-year Treasury yield close to 1.60% on Friday’s trading.

Other major central bankers also offered remarks with Bank of Japan Governor Haruhiko Kuroda said he would not widen the band for the country’s long-term borrowing rate, a move that would have allowed yields to rise.

The 10-year Japanese government bond yield TMBMKJP-10Y, 0.097% fell 4.3 basis points to 0.093%.

What did market participants say?

“The bond market vigilantes can shout all they want, but for now, the Fed is not planning to twist. Maybe that changes if bond markets become disorderly enough to trigger credit spread widening, but that’s not happening yet,” said Kit Juckes, a strategist at Société Générale.