Most U.S. bond yields pulled back on Thursday in the last full trading session of 2022.
What’s happening
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The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.369%
was up 0.9 basis point at 4.368% at 3 p.m. Eastern. Yields and debt prices move opposite each other. -
The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.820%
retreated 5.3 basis points to 3.833%, after ending the New York session at a seven-week high on Wednesday. -
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
3.902%
fell 5.3 basis points to 3.922%.
What’s driving markets
Trading was thin because of the holiday period and with many investors reluctant to make fresh bets given the new year is only a few days away. SIFMA has recommended trading in U.S. fixed-income markets halt an hour early at 2 p.m. Eastern on Friday. Markets will be closed Monday in observance of New Year’s Day, which falls on Sunday.
However, there was softness in yields as some traders worry that Beijing’s easing of travel restrictions will help COVID-19 spread internationally and impact other economies.
“I warn my backers…not to read too much into this week’s low volume /liquidity price action,” said Stephen Innes, managing partner at SPI Asset Management.
“Many factors affect market performances during the winter holiday; least of all, institutional investors are forced to turn very transactional into quarter-end and year-end rebalancing activity,” Innes added.
Initial jobless claims rose by 9,000 to 225,000 in the week ended Dec. 24 , the U.S. Labor Department said Thursday. Economists polled by The Wall Street Journal had estimated new claims would rise 7,000 to 223,000 after claims rose 2,000 to 216,000 in the prior week. The number of people already collecting jobless benefits rose by 41,000 to 1.71 million. This is the highest level since last February.
For, now investor focus is on what 2023 will bring in relation to Federal Reserve policy as the central bank continues to battle inflation that remains more than three times its 2% target.
The U.S. Treasury auctioned $35 billion of 7-year notes on Thursday. The sale produced “run-of-the-mill” statistics despite thin trading conditions, said Thomas Simons, money market economist at Jefferies, in a note.
The sale produced a tail — the difference between the lowest accepted bid and average bid — of 0.9 basis point. Bids outnumbered supply by a ratio of 2.45:1.