U.S. Treasury yields were mixed on Thursday morning, as investors continued to digest the Federal Reserve’s announcement that it will begin to taper its bond purchases.
The yield on the benchmark 10-year Treasury note fell by less than a basis point to 1.5735% at 4 a.m. ET. The yield on the 30-year Treasury bond rose by less than a basis point at 1.9958%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The Fed announced Wednesday that it will begin to pull back its $120 billion monthly bond-buying program “later this month.”
The central bank is set to reduce its bond purchases by $15 billion per month, meaning its quantitative easing should end by the middle of 2022.
However, Gurpreet Gill, macro strategist of global fixed income at Goldman Sachs Asset Management, said on Wednesday that “surprises on the path of the pandemic, inflation, expectations for inflation, or wage growth could prompt a changed taper pace and impact the rate outlook.”
Gill noted that yields on short-dated U.S. bonds had risen less than those in other markets on hawkish central bank talk, but said this was because the Federal Open Market Committee had indicated its first interest rate hike would require fuller employment.
“If inflation stays far above target in 2022 however, we think the Fed may begin to say that remaining weakness in labor supply is structural and hint at rate hikes,” he said.mHowever, Gill added that if inflation begins to ease, the Fed may wait for a fuller recovery in the jobs market before raising rates.
On Thursday, the Labor Department is set to release the number of jobless claims filed last week, at 8:30 a.m. ET. Economists surveyed by Dow Jones expect that 275,000 first-time claims were filed during the week ended Oct. 30.
Last week’s number came in at a 281,000, the lowest since the pandemic began.
Auctions are scheduled to be held on Thursday for $10 billion of 4-week bills and $25 billion of 8-week bills.
— Pippa Stevens contributed to this market report.
