(Updates to U.S. afternoon trading, adds analysts quote, data,
By Dion Rabouin
NEW YORK, March 3 U.S. Treasury yields rose on
Friday, with 2-year notes touching a fresh 7-1/2-year high and
other maturities hitting multiweek peaks as statements from
Federal Reserve officials including Chair Janet Yellen appeared
supportive of an increase to U.S. overnight interest rates.
Yellen's remarks at the Executives' Club of Chicago signaled
to many market participants that the Fed was ready to pull the
trigger on an interest rate increase this month.
"It sounds like all the ducks are in a row now," said Mike
Collins, senior portfolio manager at PGIM Fixed Income in
Newark, New Jersey.
"There was some trepidation or concern that (Yellen) would
sound more dovish and not talk about hiking in the near term and
maybe push off the probability. I think that would’ve been a big
mistake ... The market conditions are ripe, the economic
conditions are ripe and the global conditions are ripe (for a
In addition to Yellen, four other top U.S. central bank
officials spoke at various times during the day.
Fed funds futures prices show traders see more than an 85
percent chance of a rate increase this month, according to CME
Group's Fed Watch tool.
Trading was choppy during the day, with 2-year yields
touching their highest level since August 2009, and
benchmark 10-year yields rising to 2.507 percent,
the highest since Feb. 15. Yields on 7-year notes
rose to 2.347 percent, also the highest since Feb. 15.
While yields hit new highs during the day, they closed
Friday's session little changed from their late Thursday levels.
That was because investors had largely priced in a rate hike
for March earlier this week, said Karyn Cavanaugh, senior market
strategist at Voya Investment Management in New York.
"The writing has been on the wall for the past couple of
days," she said.
New York Fed President William Dudley and San Francisco Fed
President John Williams both suggested in comments earlier this
week that the Fed is poised to raise rates sooner rather than
The widespread expectation of a Fed rate hike pushed
benchmark yields up by 18 basis points for the week, the largest
one-week increase since Nov. 18, the week after the U.S.
(Reporting by Dion Rabouin; editing by Dan Grebler and Diane