Bonds & Rates
Treasury yields climb as oil and inflation risks reprice
The bond market sells off while credit and rate-sensitive assets take a hit.
Treasury yields move higher across the curve. The 2-Yr yield rises to 4.21%, the 5-Yr climbs to 4.363%, the 10-Yr rises to 4.609%, and the 30-Yr ticks up to 5.098%. That is a broad selloff, not just a short-end move.
The official rate series show the same direction. The 3-Mo Treasury yield stands at 3.85% versus 3.83% previously, and the 2-Yr official series is 4.21% versus 4.16% before. CNBC Markets says Fed governor Waller warns hikes are still possible, and that kind of language fits a market that is pricing more policy uncertainty as inflation and energy headlines intensify.
Credit proxies weaken too. LQD falls 0.5% to 106.96 and HYG drops 0.2% to 79.52. The official IG spread edges up to 0.77% from 0.76%, while the high-yield spread is 2.69% versus 2.70% previously. MUB slips 0.1% to 106.9.
Mortgage rates are already moving in the higher direction. The 30-Yr fixed mortgage rate prints at 6.49%, up from 6.43% the prior week. That matters because the same rate pressure that hits bonds also weighs on housing and other rate-sensitive corners of the market.