10-Year Yield Climbs To 4%
Illustrating the intense level of borrowing by the U.S. government, the yield on 10-year Treasuries breached the 4% level today for the first time since June of last year.
While investors continue to pour billions into U.S. notes, they are increasingly demanding a higher price.
The move higher in yields sends a mixed message to investors. It is positive in the sense that it is a sign that the economic recovery is gaining traction. It is negative as it cost more for the U.S. to finance its massive deficits, it could signal that investors see inflation down the road, and it could signal that investors see U.S. debt as a higher risk.
Recent solid economic data could be the driving force in today's move. On Friday, with the market closed, the Labor Department showed that nonfarm payrolls for the month of March increased by 164,000, marking the largest monthly gain in three years. Today, the Institute for Supply Management reported that its service index grew to 55.4 last month after a reading of 53 in February. Economists had expected a reading of 54, as any number above 50 signals growth.
Related ETFs:
iShares Barclays 20+ Year Treas Bond (NYSE: TLT)
iShares Barclays 7-10 Year Treasury (NYSE: IEF)
iShares Barclays 1-3 Year Treasury Bond (NYSE: SHY)
Ultra 7-10 Year Treasury ProShares (NYSE: UST)
UltraShort 7-10 Year Treasury ProShares (NYSE: PST)
While investors continue to pour billions into U.S. notes, they are increasingly demanding a higher price.
The move higher in yields sends a mixed message to investors. It is positive in the sense that it is a sign that the economic recovery is gaining traction. It is negative as it cost more for the U.S. to finance its massive deficits, it could signal that investors see inflation down the road, and it could signal that investors see U.S. debt as a higher risk.
Recent solid economic data could be the driving force in today's move. On Friday, with the market closed, the Labor Department showed that nonfarm payrolls for the month of March increased by 164,000, marking the largest monthly gain in three years. Today, the Institute for Supply Management reported that its service index grew to 55.4 last month after a reading of 53 in February. Economists had expected a reading of 54, as any number above 50 signals growth.
Related ETFs:
iShares Barclays 20+ Year Treas Bond (NYSE: TLT)
iShares Barclays 7-10 Year Treasury (NYSE: IEF)
iShares Barclays 1-3 Year Treasury Bond (NYSE: SHY)
Ultra 7-10 Year Treasury ProShares (NYSE: UST)
UltraShort 7-10 Year Treasury ProShares (NYSE: PST)
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