US Treasury yields were flat early Monday, following the March employment report, which hit government paper prices during the Good Friday holiday. The yield of the 10-year Treasury note TMUBMUSD10Y, 1,730% was at 1,729%, compared to 1,721% last Friday. The TMUBMUSD02Y 2-year note, 0.196% remained practically flat at 0.188%, while the yield of the TMUBMUSD30Y 30-year bond, 2.385% rose 1.6 basis points to 2.382%. Bond prices move inversely to yields. What drives the Treasurys? In economic data released Monday, the Institute for Supply Management Services Index will provide insight into how restaurants, hotels and other leisure sectors are recovering from the pandemic. Many service companies were hit by the work-from-home and social distancing guidelines that emerged from the COVID-19 pandemic.
Still, investors are seeing signs that the US job market and economy are picking up steam. On Friday, the March employment report showed a 916,000 job increase, well above economists’ forecasts. The report triggered a sell-off on maturities between 5 and 7 years, the area of the bond market seen as a proxy for interest rate expectations. Analysts said its weakness showed that traders were, once again, betting against the Federal Reserve’s ability to remain stoic in the face of a rapidly improving economy. Market participants are assessing expectations of a rate hike by the end of 2022. But most Fed officials don’t see a rise in benchmark interest rates until after 2023, according to a so-called point plot diagram. the Fed.? The employment report marked a “big step forward, but this will not change the mindset of the Fed. The Fed will target any metric to stay subdued in the short term,” said Gregory Faranello, head of US rates at AmeriVet Securities.