TREASURIES-10-year yields at highest since November following strong retail sales data

BY Reuters | TREASURY | 04/15/24 08:38 AM EDT

By David Randall

NEW YORK, April 15 (Reuters) - Yields on benchmark U.S. 10-year Treasuries jumped to their highest level since November on Monday on concerns that supply chains would slow and energy prices would jump following Iran's drone and missile attack on Israel Saturday.

Fears that inflation would reaccelerate have prompted investors to reevaluate their expectations for interest rate cuts this year. Futures markets are now pricing in 41 basis points in rate cuts by the end of December, down from more than 160 basis points in expected cuts at the start of the year.

"The escalation of the conflict in the Middle East has contributed further to the inflationary angst that is defining the US rates market at the moment," said Ian Lyngen, head of US rates strategy at BMO Capital Markets. "The stickiness of realized inflation demonstrated via the Q1 data has only served to reinforce concerns that there is another leg higher in the offing."

Yields continued to rise after stronger than expected retail sales data suggested that consumers are weathering high interest rates, reducing the need for rate cuts.

The yield on 10-year Treasury notes was up 11.7 basis points to 4.616%. The yield on the 30-year Treasury bond was up 10 basis points to 4.703%.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 10 basis points at 4.982%.

(Reporting by David Randall; Editing by Chizu Nomiyama)

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.