The 10-year Treasury yield rose again on Friday as rates turned around this week due to the Federal Reserve inching closer to pulling away its emergency pandemic stimulus.
The Fed said this week that it would taper its $120 billion in monthly bond purchases “soon” and Chairman Jerome Powell said he would need to see just one more good jobs report to convince him the economy is ready for the removal of this stimulus. The central bank then wants to wrap up the taper by mid-year next year, with a rate hike following before 2022 is out.
The 10-year Treasury note gained 4 basis points on Friday to 1.453% after ending last week at 1.37%. At one point earlier this week amid fears from a possible China property crisis, the yield touched as low as 1.29%. The yield on the 30-year Treasury bond was up 6 basis points at 1.985%. Yields move inversely to prices.
Bond investors have two big worries right now, said Bill Callahan, Investment Strategist at Schroders.
“Inflation is proving stickier than originally anticipated, and the delta variant wave is subsiding, meaning that the economic growth is likely to accelerate into the end of the year,” he said. “High inflation and strong economic growth makes bonds an unappealing asset class relative to stocks and real assets.”
U.S. new-home sales increased for the month of August for the second straight month, the U.S. Census Bureau reported on Friday.
