Treasury bonds extend biggest rally in months

Treasury bonds continued their biggest rally in months as 2-year and 10-year bond yields fell further on Friday, but analysts expect a quiet session as Monday is a US holiday and financial markets are closed.

What returns do
  • The 2-year Treasury yield TMUBMUSD02Y,
    declined 6 basis points to 3.09%.

  • The 5-year Treasury yield TMUBMUSD05Y,
    declined 8.6 basis points to 3.28%.

  • The 10-year Treasury yield TMUBMUSD10Y,
    fell 9.8 basis points to 3.20%.

  • The 30-year Treasury yield TMUBMUSD30Y,
    fell 8 basis points to 3.27%.

What moves the markets

The Federal Reserve’s decision to raise its interest rate target by 75 basis points on Wednesday sparked a relief rally in bonds, which traded higher as Powell left the door open for either a 75 basis point or 50 basis point rate hike next month. Some analysts said the market feared a more aggressive move from Powell.

What Analysts Say

Ian Lyngen, head of US interest rate strategy at BMO, said the turnaround from Tuesday’s 3.497% yield peak was “dramatic,” as was the historic rate hike and the Fed’s forward guidance.

With the June 16 holiday in the US on Monday, Lyngen said he expected a largely calm session with low volatility. Treasury bonds extend biggest rally in months

Brian Lowry

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