Treasury yields ticked higher Friday, with haven-related demand for government paper appearing to fade as a stock-market selloff that’s taken the S&P 500 index to the brink of a bear market let up.
What yields are doing
The yield on the 10-year Treasury note
was at 2.87%, up from 2.854% at 3 p.m. Eastern on Thursday.
The 2-year Treasury note yield
was at 2.637%, up from 2.611% Thursday afternoon.
The yield on the 30-year Treasury bond
was at 3.078% versus 3.065% late Thursday.
What’s driving the market
Treasury yields have slipped back from early May levels that briefly saw the 10-year top the 3.2% level. Meanwhile, equities have extended a slide in volatile trading that’s seen major U.S. stock indexes tumble. Thursday’s close left the S&P 500
down 18.7% from its Jan. 3 record close, nearing the 20% pullback that would mark a bear market.
Stock-index futures pointed to a bounce for Wall Street on Friday.
Investor risk appetite was lifted after the People’s Bank of China on Friday lowered its benchmark lending rate for loans of five years or more, a key reference rate for home mortgages. The country has been battling COVID outbreaks, with lockdowns in industrial hubs such as Shanghai blamed for weak factory and consumer activity data in April.
Fears of stagflation —- a combination of persistent inflation and stagnant growth —- are on the rise and have been key market drivers, analysts said. The Federal Reserve is seen sticking with its plans to aggressively raise interest rates and shrink its balance sheet in an effort to get price pressures under control.
No major U.S. economic data were on tap for Friday.
What analysts are saying
Thursday’s price action made it clear, “with economic data starting to waver, that bonds are reassuming their time-tested position as a risk-off hedge against an economic slowdown,” wrote Tom Essaye, founder of Sevens Report Research, in a note.