US 10-year Treasury yields are now up 21 basis points from the PCE lows and you have to wonder: What would it look like if Friday’s inflation data had been bad instead of good?
Yields are now at a one-month high and rising across the curve; which is helping to boost the US dollar.
Why?
1) Quarter end
It’s always tough to read moves around quarter end. At the start of April, we also saw a big move up in yields, with a rise of 15 basis points on the first day of the quarter that continued for a total of 51 basis points to a quarterly high of 4.74% in late April. There are always quirks around the turn of the quarter and that makes for a tough read.
2) Japanese selling
We know that Norinchukin Bank will be selling $63 billion in Treasuries in the year ahead but we don’t know what the Ministry of Finance is planning in terms of yen intervention. I’ve heard arguments on both sides of whether they need to sell Treasuries to boost the yen but…
