10 Year Treasury Yields Jump Higher

U.S. Treasury yields jumped higher after the Federal Reserve released their last monetary policy meeting minutes of the Federal Open Market Committee (FOMC), held in January. The minutes were a tad confusing.

The benchmark 10 year Treasury note yield leaped higher. By 2 pm EST, it hit a four year high at 2.943 percent.

The two year bond yield was at 2.282 percent. This its highest level since September 19, 2008, when it was at 2.313 percent. Please keep in mind that yields move inversely to prices.

Fed officials expect expanding economic growth and more and more inflation. This was revealed in the Federal Open Markets Committee’s minutes. Officials said that “upside risks” with economic growth is increasing thanks to tax cuts. There is also higher consumer spending and confidence. “A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the summary stated.

Treasury Traders perceive a more Hawkish Fed in 2018

Treasury traders, as well as the financial markets are seeing a renewed hawkishness from the FOMC over the next several months. This is thanks to strong wage and inflation numbers. The Fed talked about paying more attention to asset prices. Even as we saw a downward correction, in January, asset growth has risen. That is a hawkish view from the Fed. These minutes were from three weeks ago. Since then, inflation has creeped higher as has better than a better than expected wage increase.

Also in the news, the Treasury Department auctioned $35 billion in five year notes. They came in at a high yield of 2.658 percent. The bid to cover ratio was at 2.44, indicating high demand. Indirect bidders, like major central banks, were given 58 percent. Direct bidders, like domestic money managers, were awarded 12.7 percent of the auction.