Long-term Treasury yields end first quarter with largest advances since September

By Vivien Lou Chen

Yield on 2-year Treasurys see biggest quarterly advance since June

Rates on U.S. government debt finished the first quarter with their largest jumps since September for 10- and 30-year Treasurys and since June for 2-year Treasurys, buoyed by data showing that the economy continued to grow and the labor market continued to hold up.

What happened

The yield on the 2-year Treasury BX:TMUBMUSD02Y climbed 5 basis points to 4.618% on Thursday, from 4.568% on Wednesday. It rose 37 basis points during the first quarter, the largest quarterly advance since the period that ended last June, based on 3 p.m. Eastern time figures from Dow Jones Market Data. The yield on the 10-year Treasury BX:TMUBMUSD10Y finished marginally lower at 4.192%, versus 4.195% on Wednesday. The yield on the 30-year Treasury BX:TMUBMUSD30Y slipped 2.1 basis points to 4.337%, from 4.358% on Wednesday. For the quarter, 10- and 30-year rates jumped by 33.2 basis points and 31.7 basis points, respectively. Those are their largest quarterly advances since September.The bond market closed at 2 p.m. Eastern time on Thursday, ahead of the Good Friday holiday.

What drove markets

In U.S. data released on Thursday, the final reading of fourth-quarter growth was raised to 3.4% from a previous 3.2% estimate, pointing to unexpected resiliency in the economy. Separately, initial jobless-benefit claims fell slightly to 210,000 last week in a sign of continued labor-market strength. And consumer sentiment climbed in March to its highest level since July 2021, based on a final reading provided by the University of Michigan.

Meanwhile, traders assessed remarks made late Wednesday by Fed governor Christopher Waller, who said recent high inflation readings and strong job gains this year have bolstered his view that there is no rush to lower interest rates.

On Thursday, fed-funds futures traders slightly reduced the likelihood of a quarter-point rate cut by June, to 61% from 63.7% a day ago, according to the CME FedWatch Tool. They still mostly expect three cuts of a quarter-point each by December.

The February personal-consumption-expenditures price index, the Federal Reserve's favored inflation gauge, will be released at 8:30 a.m. Eastern time on Friday, when markets will be closed for the Good Friday holiday. Fed Chair Jerome Powell is due to make comments later that morning.

What strategists are saying

Investors are "ready to turn the page on another confusing month of data that, while still leaving expectations for multiple rate cuts this year intact, have further shaken the soft landing confidence we saw as recently as the January [Federal Open Market Committee] decision. Markets will have to wait until Monday to react to tomorrow's holiday-released February PCE data," said macro strategist Will Compernolle of FHN Financial in New York.

-Vivien Lou Chen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-28-24 1454ET

Copyright (c) 2024 Dow Jones & Company, Inc.