Home Bonds 10-year Treasury yield hits an 8-month high

10-year Treasury yield hits an 8-month high

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  • A single-day record for new COVID-19 infections has been set on Wednesday
  • The U.S. 10-year Treasury yield lost 6 basis points to 0.918%
  • Yields recover with today’s high of 0.982% the highest point since the pandemic-driven selloff in March

U.S. Treasury yields are trading in a volatile manner amid fluid COVID-19 situations worldwide. The 10-year yield declined yesterday on the constant resurgence in coronavirus cases, but recovered today.

Fundamental analysis: New single-day record in daily infections

As many as 144,000 new COVID-19 cases were registered on Wednesday, setting a single-day record and driving the seven-day average to 127,603, 35% up compared to the week ago. Following the latest data that suggested a constant improvement in the labour market, yields stayed down. 

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On the data front, 709,000 jobless claims were reported on Thursday for the week through November 7, compared to 757,000 from the week before and economists’ estimates of 740,000 for the previous week. 

This is the fourth week in a row that figure dropped compared to the previous period, while claims stayed above the pre-coronavirus peak of 695,000 in 1982.

“Over the short-term, the stock market is watching labour market data through the lens of stimulus prospects,” said Kenny Polcari, managing partner at financial consulting firm Kace Capital Advisors. 

“Worsening jobs data strengthens the case for more stimulus and vice versa. More stimulus is usually welcomed by investors.”

On Thursday, auctions took place for $30 billion worth of four-week bills, $35 billion of eight-week bills, $25 billion of 105-day bills and $30 billion of 154-day bills and  $27 billion in 30-year bonds will also be auctioned that day.

Technical analysis: US10Y dips lower

The U.S. 10 Year Treasury yield lost 6 basis points to 0.918%, while the yield on the 30-year Treasury bond dropped to 1.688% on Thursday. Treasury yields declined following the closing of the U.S. bond market session on Veteran’s Day.  

10-year Treasury yield daily chart (TradingView)

The 10-year yield has managed to recover yesterday’s losses today as it now trades at 0.888%, higher than the week open at 0.814%. Today’s high of 0.982% represents the highest point since the pandemic-driven selloff in March. 

Summary

U.S. Treasury yields dropped yesterday on the rapidly-increasing number of new coronavirus infections. Yields have managed to recover today to trade at highest levels since March.