| March 1
March 1 U.S. Treasury yields rose broadly on
Wednesday, with the 2-year's hitting a more than seven-year
high, on increased expectations that the Federal Reserve will
raise U.S. overnight interest rates at its March meeting.
Fed funds futures prices showed investors saw about a 65
percent chance of a rate hike this month after comments from two
central bank officials on Tuesday.
New York Fed President William Dudley, one of the most
influential U.S. central bankers and a permanent voter of the
Federal Open Markets Committee, said the case for tightening
monetary policy soon had become "a lot more compelling." San
Francisco Fed President John Williams said: "A rate increase is
very much on the table for serious consideration" at the March
Yields on the 2-year Treasury note rose to 1.308
percent, their highest since August 2009.
The jump in the 2-year yields put the spread between U.S.
2-year Treasuries and German 2-year bunds on pace for its
highest closing level since 2000, according to Reuters data.
"It was quite unexpected, the comments from Dudley," said
Bruno Braizinha, interest rate strategist at Societe Generale.
"He must have felt he needed to get his message across very
forcefully. And the market took it very seriously."
Longer-dated Treasuries also saw substantial selling after
the release of January's personal consumption expenditure, or
PCE, data that showed the Fed's favored measure of inflation
posting its largest monthly increase in four years.
The yield on 10-year notes rose to 2.471
percent, the highest since Feb. 16. Prices on 30-year bonds
fell by more than 2 points, pushing yields to 3.074
percent, the highest since Feb. 16.
The data followed a Tuesday night speech from U.S. President
Donald Trump, who was short on specifics about his already
proposed $1 trillion stimulus package, tax cuts and regulation
rollbacks. All of those would probably add to U.S. inflation,
which is nearing the Fed's 2 percent target.
"The $1 trillion plan seems to have been taken pretty well,
but it’s still just a number, and it’s missing details,"
Braizinha said. "And we've been missing details on tax reform,
border tax, regulatory easing."
(Reporting by Dion Rabouin; Editing by Lisa Von Ahn)