U.S. Treasury yields on Friday marked their biggest weekly climb in nearly four months, as global stocks rose, underscoring demand for assets perceived as risky and away from havens like gold and government paper.
The yield on the 10-year Treasury note TMUBMUSD10Y, +1.47% added 4.4 basis points to 2.755%, adding to a weekly yield rise of 9.9 basis points, its largest such rise since Nov. 2, according to Dow Jones Market Data. The two-year Treasury note yield TMUBMUSD02Y, +1.77% TMUBMUSD02Y, +1.77% rose 4.6 basis points to 2.559%, contributing to a weekly advance of 6.7 basis points, also representing the short-dated bond’s sharpest yield climb since early November. Meanwhile, the 30-year Treasury bond yield TMUBMUSD30Y, +1.32% gained 3.8 basis points on the day to 3.125%, with a weekly rise of 10.4 basis points, representing its firmest yield gain in about four months.
Yields rise as bond prices fall.
Some fixed-income participants pegged gains over the week to similarly sharp yield moves in Europe, as investors awaited a policy update from the European Central Bank in Frankfurt, slated for March 7. The ECB has been angling toward ending its quantitative-easing program and raising interest rates, even as signs of weakness in economic data in Italy and Germany have cropped up.
Germany’s 10-year Treasury notes TMBMKDE-10Y, +0.97% known as the bunds, rose to 0.182% from 0.096% last Friday, according to FactSet data.
Domestically, investors reacted to a patchwork of data throughout the week, including, the Institute for Supply Management manufacturing report which showed a fall to 54.2 in February, down from 56.6 in January. Economists polled by MarketWatch had expected a reading of 55.5. An index above 50 reflects a growing economy. Meanwhile, the University of Michigan consumer sentiment index missed expectations coming in at 93.8 in February compared with the MarketWatch-polled consensus of 95.6.
Earlier in the session, the Commerce Department said the PCE inflation index rose 0.1% in December, above estimates of a 0.4% decline, according to a MarketWatch poll.
Meanwhile, fourth-quarter gross domestic product on Thursday came in at a rate of 2.6%, trending sequentially lower but proving better than average economists’ estimates polled by MarketWatch for 1.9%.
“The most meaningful move in yesterday’s trading didn’t concern equities, but rather the move in the Treasury market. Directly following jobless claims & stronger than expected GDP data,” wrote Mark Newton independent analysts at Newton Advisors, suggesting that bond yields are likely to continue to trend higher.
The Dow Jones Industrial Average DJIA, +0.43% and the S&P 500 index SPX, +0.69% ended the session higher, as investors continued to hold out optimism about U.S.-China trade talks. Gold prices GCJ9, -1.64% booked their sharpest weekly drop since August, ending below $1,300 an ounce, as the dollar, as measured by the ICE U.S. Dollar Index, beefed up by 0.3%.