Treasury Notes Decline on Speculation Fed Will Keep Tapering
Five-year note yields led increases before data tomorrow forecast to show manufacturing growth quickened this month and existing home sales rose in December, as U.S. jobs growth trailed forecasts last month. Fed policy makers meet next week after voting in December to trim bond purchases by $10 billion a month. Treasury will announce details tomorrow for the first sale of the floating-rate two-year notes next week.
“The thought that maybe tapering would be slowed by the weak jobs number has dissipated, and as such yields are drifting higher with five-year notes taking much of the punishment,” said Jason Rogan, managing director of U.S. government trading at Guggenheim Securities LLC, a New York-based brokerage for institutional investors. “We should continue to trade near these levels until we hear from the Fed and get new data out of the way.”
The U.S. 10-year yield rose four basis points, or 0.04 percentage point, to 2.87 percent at 5:05 p.m. New York time, according to Bloomberg Bond Trader prices. The 2.75 percent note due November 2023 fell 10/32, or $3.13 per $1,000 face amount, to 99. The yield dropped to 2.82 percent on Jan. 17, the lowest level since Dec. 11.
Five-year note yields added six basis points to 1.70 percent.