U.S. government bond yields jumped on Thursday, the first trading day after the Veterans Day holiday. The 10-year Treasury yield rose about 12 basis points to 5.11% in early afternoon trading, from 4.99% at Tuesday’s close, its highest level in about three weeks. A basis point is one-hundredth of a percentage point.
Shorter-term yields, which follow expectations for the Federal Reserve most closely, rose even faster. The 2-year yield climbed about 14 basis points to 4.87%, and the 30-year yield rose about 9 basis points to 5.44%.
CNBC tied the selloff to rising oil prices and expectations of Fed rate increases. Brent crude rose more than 2% to near $95 a barrel after President Donald Trump said, “We don’t need a deal with Iran”. Traders are pricing in a rate increase at the Fed’s Dec. 8-9 meeting as a certainty, with about a 13% chance of a half-point move, according to CME Group’s FedWatch tool, as reported by CNBC.
The Treasury also sold $25 billion of new 30-year bonds on Thursday at a yield of 5.441%. Bids totaled 2.36 times the amount offered, according to TreasuryDirect.
Higher yields raise borrowing costs for mortgages and companies. The yields in this story are from early-afternoon trading and may change by the close.
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