TREASURIES-U.S. 10-yr yield tops 1.5% level last seen in June

BY Reuters | ECONOMIC | 09/27/21 09:29 AM EDT
    (Updates with market activity, economic data, analyst comment,
bylines and dateline)
    By Ross Kerber and Dhara Ranasinghe
    Sept 27 (Reuters) - U.S. Treasury yields resumed their march
higher on Monday, with 10-year yields hitting their highest
level in three months on  solid economic data and signals the
Federal Reserve is shifting towards a more hawkish policy.
    The 10-year Treasury yield rose as high as
1.516% in morning trading, its first time above 1.5% since June
29, and was last up 2.4 basis points at 1.4854%.
    The benchmark note's yield rose almost 9 basis points last
week, the fifth week of gains and the biggest weekly jump since
March, as investors reacted to hawkish shifts by major central
banks including the U.S. Federal Reserve and the Bank of
England.
    Across the curve, most other Treasury yields were higher on
the day on Monday with 30-year yields rising above 2% for the
first time since mid-August.
    Analysts said the continued selloff in bond markets was
likely driven by position adjustments and a reassessment of the
inflation outlook.
    Jim Barnes, director of fixed income at Bryn Mawr Trust,
said a strong Commerce Department report on durable goods Monday
morning contributed to traders' risk-on sentiment.
    Orders for non-defense capital goods excluding aircraft, a
closely watched proxy for business spending plans, rose 0.5%
last month, the department said. Economists polled by Reuters
had forecast core capital goods orders increasing
0.4%.
    "Today's continuing rise in yields was the economic picture
catching up to the central bank news we got from last week,"
Barnes said.
     The Fed has said it will start to reduce its bond purchases
as soon as November if the economy continues on its current
track.
    The yield on the two-year U.S. Treasury note,
seen as a sign of inflation expectations, was up less than a
basis point at 0.2799% in morning trading.

      September 27 Monday 8:57AM New York / 1257 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.03         0.0304    -0.005
 Six-month bills               0.0525       0.0532    0.002
 Two-year note                 99-180/256   0.2799    0.006
 Three-year note               99-120/256   0.5559    0.011
 Five-year note                98-232/256   0.9781    0.020
 Seven-year note               98-236/256   1.2882    0.026
 10-year note                  97-216/256   1.4854    0.024
 20-year bond                  96-184/256   1.9498    0.016
 30-year bond                  99-248/256   2.0014    0.014

   DOLLAR SWAP SPREADS
                               Last (bps)   Net
                                            Change
                                            (bps)
 U.S. 2-year dollar swap        11.00        -0.25
 spread
 U.S. 3-year dollar swap        12.25         0.00
 spread
 U.S. 5-year dollar swap         9.50         0.00
 spread
 U.S. 10-year dollar swap        2.50        -0.25
 spread
 U.S. 30-year dollar swap      -24.50        -0.50
 spread




 (Reporting by Dhara Ranasinghe; editing by Sujata Rao;
Editing by Bernadette Baum)

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.

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