Yields in the United States have risen in response to data and an ECB statement.
The benchmark 10-year US Treasury yield rose slightly on Thursday, following a flurry of economic data and a policy announcement from the European Central Bank that was less aggressive than expected.
Retail sales increased by 0.5 % in March, falling just short of the 0.6 % estimate, while data for February was revised higher to show a 0.8 % increase rather than the previously reported 0.3 % increase. Higher gasoline prices contributed significantly to March’s gains.
Labor-market data continued to show strength, with weekly initial jobless claims increasing by 18,000 to 185,000, exceeding the 171,000 estimate but remaining a healthy number.
US yields began to rise after the ECB reiterated its intention to end its stimulus program in the third quarter but provided no further details on its rate-hiking schedule, citing uncertainties caused by Russia’s invasion of Ukraine.
The ECB contrasts with the Federal Reserve, which has taken a more aggressive stance in its tightening plans, with investors widely expecting the Fed to raise rates by 50 basis points at its May meeting.
“From the Fed’s and the market’s perspective, you’re not getting any help from the European Central Bank, the dollar is strengthening, and there’s more work to do for U.S. rates markets – that’s how it’s being interpreted at this point,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.
“The market believes there is a lot more to go because nothing appears to be dissuading the Fed at this point,” Haworth added. “The retail sales numbers weren’t bad but they weren’t great, they certainly indicate the consumer isn’t falling behind the curve but they aren’t accelerating spending just yet.”
The 10-year Treasury note yield (US10YT=RR) increased 9.4 basis points to 2.783 % .
New York Fed President John Williams said on Thursday that the Fed should consider raising interest rates by half a percentage point at its next meeting in May, echoing other policymakers’ calls.
The 30-year Treasury bond yield (US30YT=RR) rose 9.1 basis points to 2.887 % .
The gap between the yields on two-year and 10-year Treasury notes (US2US10=RR), which is seen as an indicator of economic expectations, was 34.9 basis points, according to a closely watched part of the US Treasury yield curve.
The two-year U.S. Treasury yield (US2YT=RR), which typically moves in lockstep with interest rate expectations, was up 9.1 basis points at 2.433 % .
The five-year U.S. Treasury Inflation-Protected Securities (TIPS) (US5YTIP=RR) breakeven rate was last at 3.385 % , after closing at 3.363 % on Wednesday.
The 10-year TIPS breakeven rate (US10YTIP=RR) was last at 2.865 % , implying that the market expects annual inflation to average 2.9 % over the next decade.
US Natural Gas Stocks Post Lower Build Than Expected in Week Ended April 8
US natural gas stocks built by 15 billion cubic feet in the week ended April 8, lower than the 16 bcf increase expected in a survey compiled by Bloomberg and following a draw of 33 bcf in the previous week.
Stocks at 1.397 trillion cubic feet were 23.9% lower than in the comparable week a year ago and 17.8% below their 5-year average.