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Bond Report: 10-year Treasury yield trades at nearly 3 1/2-year high as inflation outlook remains in focus after April jobs data


Most Treasury yields moved higher on Friday, pushing 5- to 30-year rates further above 3%, as investors remained focused on the inflation outlook following the release of April’s U.S. jobs data.

What are yields doing?

The yield on the 10-year Treasury note

rose 5.8 basis points to 3.124% from 3.066% at 3 p.m. Eastern on Thursday. That’s the highest since Nov. 13, 2018, based on 3 p.m. levels. The rate rose 23.9 basis points this week, most of which came in the past two trading days, according to Dow Jones Market Data.

The yield on the 30-year Treasury bond

advanced 6.1 basis points to 3.22% from 3.159% late Thursday. That’s the highest since Dec. 3, 2018. It rose 27.5 basis points this week. Of that weekly total, 21.9 basis points came in the last two trading days, the biggest two-day gain since March 18, 2020.

The 2-year Treasury note yield BX:TMUBMUSD02Y fell 2.6 basis points to 2.696% from 2.722% Thursday afternoon. It finished the week unchanged.

What’s driving the market?

Data released on Friday showed that the U.S. added a solid 428,000 new jobs in April, but an acute labor shortage showed little improvement last month and threatens to contribute to the highest inflation in 40 years. Economists surveyed by The Wall Street Journal had expected nonfarm payrolls to rise by 400,000.

The unemployment rate was unchanged at 3.6%, and hourly pay rose sharply — putting the increase in the past 12 months at 5.5%.

U.S. stocks continued to be weighed down by investors’ focus on the risks of stagflation, the pernicious combination of persistent inflation and weak economic growth.

Also see: The stock-market plunge is partly due to bad news on the inflation front, says Ed Yardeni

What do analysts say?

The payrolls report “largely confirms that the labor market remains tight, affording the Fed the flexibility to tackle its price stability mandate head-on,”  said Jason Pride, chief investment officer of private wealth at Glenmede, which oversees $46.3 billion in assets.


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