TREASURIES-U.S. yields rise with eyes on Fed taper timeline

BY Reuters | ECONOMIC | 09/17/21 12:11 PM EDT
       By Rodrigo Campos
    NEW YORK, Sept 17 (Reuters) - U.S. government bond yields
edged up on Friday, with the 10-year yield touching a two-month
high, as traders look ahead to a busy week of central bank
meetings including a key one at the Federal Reserve.
    The 10-year yield briefly touched 1.3855%, its highest level
since July 14.
    Investors hope to get more clarity from the Fed regarding
the schedule for slowing down its asset purchases, which will
also give a rough timeline for when the next rate increase could
    The Fed is expected to tie any policy decision to U.S. job
growth in September and beyond.
    Other than the Fed's two-day meeting ending on Wednesday,
the central banks of China, Japan, Sweden, Brazil, the United
Kingdom and Turkey are scheduled to meet next week to discuss
monetary policy.
    "My sense is that nobody really wants to be particularly
aggressively positioned" going in to next week, said Guy LeBas,
chief fixed income strategist at Janney.
    He said the Treasury market was "slowly bleeding out the CPI
rally" that took yields to three-week lows earlier in the week.
    The yield on 10-year Treasury notes was up 3.9
basis points at 1.3702%.
    The yield on the 30-year Treasury bond was up
3.4 basis points at 1.9146%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 114.2 basis points.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 0.9 basis
point at 0.226%.
    The U.S. government will auction $24 billion in 20-year
bonds on Sept. 21 and $14 billion 10-year TIPS on Sept. 23 in
reopenings that will both settle on Sept. 30.

    September 17 Friday 11:59AM New York / 1559 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.035        0.0355    0.001
 Six-month bills               0.045        0.0456    0.000
 Two-year note                 99-206/256   0.2257    0.009
 Three-year note               99-184/256   0.4699    0.013
 Five-year note                99-114/256   0.8648    0.031
 Seven-year note               99-188/256   1.1649    0.035
 10-year note                  98-228/256   1.3702    0.039
 20-year bond                  98-40/256    1.8612    0.041
 30-year bond                  101-240/256  1.9146    0.034

                               Last (bps)   Net
 U.S. 2-year dollar swap        10.75         0.00
 U.S. 3-year dollar swap        12.25         0.00
 U.S. 5-year dollar swap        10.00        -0.25
 U.S. 10-year dollar swap        3.75         0.25
 U.S. 30-year dollar swap      -23.25         0.25

 (Reporting by Rodrigo Campos in New York
Editing by Matthew Lewis)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.