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Treasury yields slip as upbeat business data rekindles rate-hike bets
The two-year yield ended near 4.23% and the 10-year near 4.73% after activity data signaled business growth at its fastest pace in more than four years.
US Treasuries were softer into the weekend, with yields turning down after a week of sharp swings as investors weighed how high rates may need to go, according to LiveMint Markets. Friday losses were led by the short end, after data showed business activity grew at its fastest pace in more than four years, reinforcing arguments for interest-rate hikes.
The two-year yield was nearly 5 basis points higher at 4.23%, while the 10-year rose about 3 basis points to 4.73% ahead of the weekend, a move traders framed against growing uncertainty about what Treasury Secretary Scott Bessent may do next if yields resume rising.
Attention has centered on Bessent’s remarks about potential Treasury buybacks and a plan to address US borrowing costs, though investors said the details remain unclear. The Treasury’s announcement this week to buy back additional debt was framed as an effort to improve liquidity in older securities, but market participants largely saw it as a bid to bring yields down, with long-dated yields falling then reversing.
Rabobank senior US strategist Philip Marey said Treasury intervention ultimately costs money and would be funded by shifting from longer-term to shorter-term issuance, which could run into constraints as total federal debt is capped by the debt ceiling. He added that if yields spike again, the Federal Reserve might be pulled further into bond buying, potentially making internal debate over balance sheet reduction less relevant, while another potential step discussed was adjusting long-dated issuance language to reduce auction volume at the longest maturities.