10-year Treasury yield slips before data deluge

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What could rattle markets in 2021, even as vaccines are rolling out


U.S. Treasury yields slipped on early Thursday’s trade, kicking off the new quarter as investors eyed a raft of economic data that could illuminate the health of the jobs market and the manufacturing industry.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.705%

slipped 1.710%, from 1.749% at the end of Wednesday, around its highest level since Jan 2020. The 2-year note yield
TMUBMUSD02Y,
0.164%

was at 0.164%, up 0.6 basis point. The 30-year bond yield
TMUBMUSD30Y,
2.368%

slid 5.9 basis points to 2.369%.

What’s driving Treasurys?

On the U.S. labor market front, initial jobless benefit claims for the seven-day period ending in March 27 are due at 8:30 a.m. ET. The data could continue to show the labor market’s recovery as fiscal stimulus funds flowed through households and businesses and COVID-19 vaccines were jabbed into the arms of Americans.

The Institute for Supply Management’s manufacturing index is due at 10 a.m., with MarketWatch-polled analysts forecasting a reading of 61.7. Any number above 50 marks an expansion in economic activity.

Investors will parse the details of Biden’s infrastructure plan, and assess the likelihood of the bills passing through Congress.

See: Biden rolls out $2.3 trillion infrastructure plan: ‘It’s bold, yes, and we can get it done’

The combination of buoyant economic data, fiscal stimulus and positive vaccine developments have managed to overshadow growing concerns that the world will need to grapple with another resurgence of coronavirus cases. U.S. senior public health officials warned earlier this week that if Americans had to work hard to prevent a fourth surge of the deadly disease.

What did market participants say?

Values for U.S. government bonds “have shrugged off CDC warnings about a 4th pandemic wave here and extended lockdowns in Europe.  With three themes driving the first quarter – spending, fiscal stimulus and vaccines – traders are willingness to ignore stalls in one story,” said Jim Vogel, an interest-rate strategist at FHN Financial.



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