10-Year Treasury Yield Rises Above 3% to Start Big Week of Data, as Investors Assess Fed Trajectory

Source: The New York Stock Exchange

U.S. Treasury yields moved higher on Monday morning ahead of a big week for U.S. data releases.

The yield on the benchmark 10-year Treasury note rose more than 8 basis points to 3.036%, while the yield on the 30-year Treasury bond traded about 7 basis points higher at 3.183%. Yields move inversely to prices.

The 10-year yield rose as high as 3.04% during the session, its highest level since May 11.

Investors continue to assess the likely pace and scale of interest rate rises from the Federal Reserve, with a key inflation reading due at the end of the week. May's consumer price index in the U.S. is expected to be just slightly cooler than April, and some economists are expecting it could confirm that inflation has peaked.

Treasury yields spiked in the opening months of the year as the Fed moved to tighten monetary policy. However, that rise has cooled in recent weeks.

"We think any declines in the near term will be risk-premia led, and likely temporary. By year-end, our economists expect a policy rate closer to 2.75%, and see the Fed on track to move the funds rate above 3% in 2023," Praveen Korapaty of Goldman Sachs said in a note to clients. This mix —a policy rate nearing 3% and a successful 'soft landing' for the US economy — should be consistent with 10-year Treasury yields rising further in 2H 2022."

Recent statements from the rate-setting Fed members indicate that 50-basis-point — or a half-percentage-point — rate increases are likely at the June and July meetings.

Friday's payrolls report showed the U.S. economy added a better-than-expected 390,000 jobs in May, despite fears of an economic slowdown and inflation running at a multi-decade high.

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