Treasuries yields rise slightly, ending a weak quarter for bonds
TLT•Longer-dated U.S. Treasury yields rose as the 10-year yield ended the quarter up nearly 87 basis points, its largest quarterly increase since the second quarter of 2009. Markets priced a 63% chance that the Federal Reserve will hold rates steady next month after core PCE inflation came in at 3% year over year in August.
1. Yields end quarter higher
Longer-dated U.S. Treasury yields rose, while the two-year yield was little changed, after inflation data showed core PCE increased 3% year over year in August. The 10-year yield rose 4.05 basis points to 5.296%, after reaching 5.3061%, its highest since June 2007.
2. Quarterly yield gains
The 10-year yield rose about 53 basis points in September and nearly 87 basis points for the quarter, its largest quarterly increase since the second quarter of 2009. The 30-year yield rose 4.73 basis points to 5.6413%, while the two-year yield was flat at 4.889%.
3. Rate expectations and data
Markets priced a roughly 63% chance that the Fed will keep rates steady next month, up from 55% before the PCE release. Investors were waiting for September’s nonfarm payrolls report due Friday; private payrolls data showed employment rose by 90,000 jobs in September, compared with expectations for 70,000.
