Can Treasuries rally for a second day?
TLT•Treasury yields reached 5.34%, a 24-year high, before buyers returned as yields between 5.25% and 5.35% attracted long-term value. The 10-year yield later rose 2 basis points to 5.2470%, with markets focused on the September U.S. payrolls report.
1. Treasury yields in focus
The question for markets is whether Treasuries can extend their rebound for a second day. Their last two-day rally, a month ago, soon fizzled, while yields have generally risen since late August. Forecasts call for 90,000 U.S. payroll additions in September, with estimates ranging from 35,000 to 180,000; average hourly earnings and unemployment are also being watched.
2. Rates and global markets
Markets are still expecting a second Federal Reserve rate increase by year-end, although the probability of an October move has fallen to 25%. Two Fed officials said this week they wanted more data before deciding. In Europe, the French-German yield spread widened past 140 basis points after France's budget failed to ease investor concerns about its fiscal trajectory.
3. Other market developments
Asian shares were mostly lower, while European stock futures fell 0.1% and Nasdaq futures rose 0.4%. Brent crude held around $102 as the United States was reportedly sending more troops and another carrier to the Middle East, and China suspended oil product exports. Euro zone flash inflation data and the U.S. payrolls report were due Friday.
