Treasuries saw substantial weakness during trading on Tuesday, extending the sharp pullback seen over the course of the previous session.
After an early move to the downside, bond prices moved steadily lower for much of the rest of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 11.9 basis points to 4.802 percent.
The ten-year yield added to the 11.0 basis points surge seen on Monday, ending the session at its highest closing level since August 2007.
The extended sell-off in the bond market reflected ongoing concerns about the outlook for interest rates.
Recent comments by Federal Reserve officials have suggested the central bank may raise rates higher than had been anticipated and keep rates an elevated level for longer than expected.
Adding to the interest rate worries, the Labor Department released a report unexpectedly showing a notable increase in U.S. job openings in the month of August.
The Labor Department said job openings surged to 9.61 million in August from an upwardly revised 8.92 million in July.
The jump surprised economists, who had expected job openings to edge down to 8.80 million from the 8.83 million originally reported for the previous month.
“While the value of the JOLTS data has been called into question, the Fed continues to monitor it as a gauge the of labor market conditions and on the surface, it’s telling us that labor market conditions remain tight,” said Nancy Vanden Houten, U.S. Lead Economist at Oxford Economics.
She added, “The Fed won’t make policy decisions based on one JOLTS report, but it does keep the risks tilted toward another rate hike.”
CME Group’s FedWatch Tool is currently indicating a 27.7 percent chance the Fed will raise rates by another quarter point next month and a 39.2 percent chance of a quarter point rate hike in December.
Reports on private sector employment, service sector activity and factory orders may attract attention on Wednesday along with remarks by several Fed officials.
Source: Read Full Article