Yield on 10-year U.S. Treasury bonds up 2.8 basis points at 4.175% after data; two-year U.S. Treasury yields last down 5.1 bps at 3.647% following data

Yield on 10-year U.S. Treasury bonds up 2.8 basis points at 4.175% after data; two-year U.S. Treasury yields last down 5.1 bps at 3.647% following data

Yields on U.S. government debt were moving higher Wednesday morning, led by rates on medium-term Treasuries, as traders prepared for the results of a $70 billion 5-year note auction set to be released just after 1 p.m. Eastern time . The auction has the potential to bring supply-related flows back to the forefront during Wednesday's session, given a lack of major economic data releases. The 5-year Treasury note was in the process of selling off, pushing its yield up by a few basis points to almost 3.7% .

The yield on the US 10-year Treasury note held near 4.14% on Monday, steady around a three-week high as traders awaited comments from several Fed officials - including Chair Powell - for signals on the policy outlook . St. Louis Fed President Alberto Musalem noted that rates are currently “between modestly restrictive and neutral” and warned there is limited room for further cuts without becoming overaccommodative . Last week, the Fed lowered the funds rate for the first time this year and signaled another 50 bps of reductions ahead, though Chair Powell emphasized the move did not mark the start of a new easing cycle .

US Treasury yields are heading higher again, with the 10-year yield on track for its first weekly gain in over a month after the Federal Reserve’s rate cut and some strong economic updates . Just after falling to a seven-month low, longer-term US Treasury yields have quickly turned upward, breaking a five-week losing streak. The Federal Reserve made its first interest rate cut of this cycle this week, lowering rates by 25 basis points and suggesting more reductions could follow later this year. But recent data—from jobless claims to manufacturing reports—point to a US economy running hotter than expected. That’s put fresh upward pressure on yields and widened the gap between two- and ten-year Treasuries to more than 55 basis points, its highest level since September .

As of Wednesday, the yield on the 10-year U.S. Treasury bond was up 2.8 basis points at 4.175% after data, while the two-year U.S. Treasury yields last down 5.1 bps at 3.647% following data . These movements reflect the ongoing tension between the Federal Reserve's efforts to manage economic growth and inflation expectations.

Markets will also focus on Friday’s PCE report for fresh inflation data and a busy slate of Treasury auctions this week, including $69 billion in 2-year notes on Tuesday, $70 billion in 5-year notes on Wednesday, and $44 billion in 7-year notes on Thursday .

Reference List:
https://www.marketwatch.com/livecoverage/stock-market-today-dow-sp500-nasdaq-rise-after-big-tech-pullback-powell-comments/card/treasury-yields-slightly-higher-ahead-of-70-billion-5-year-note-auction-YGuNTr9uddy9R8fqKqID
https://www.tradingview.com/news/te_news:486937:0-treasury-yields-little-changed/
https://finimize.com/content/us-treasury-yields-climb-after-fed-rate-cut-signals