U.S. 10-Year Yields Fall From 12-Month High

Treasuries advanced after 10-year U.S. government securities suffered their biggest one-day decline since October 2011 yesterday as the highest yields in 13 months helped attract buyers.

Securities in the Bank of America Merrill Lynch Global Broad Market Index have fallen 1.3 percent in May, poised for the steepest loss since April 2004 while Treasuries have dropped 1.9 percent this month, the indexes show. Yields rose yesterday after a report showed U.S. consumer confidence climbed to a five-year high. The U.S. is scheduled to sell $35 billion of five-year notes today.

“This is an opportunity to put money to work at levels that are 60 to 70 basis points higher than they were a month ago,” said Thomas di Galoma, senior vice president of fixed-income rates trading at ED&F Man Capital Markets in New York. “The perception is the economy will remain on the weak side, and people don’t want to chase the equity market.”

Treasury 10-year yields fell two basis points, or 0.02 percentage point, to 2.15 percent as of 8:40 a.m. New York time, according to Bloomberg Bond Trader data. The price of the 1.75 percent note due in May 2023 lost 1/8, or $1.25 per $1,000 face amount, to 96 14/32. The yield had climbed to 2.23 percent, the highest level since April 5, 2012. Yesterday’s decline was the most since October 2011.

The 10-day relative-strength index, a gauge of momentum, for the 10-year note, was 71.6 today from 54.9 on May 3. A level below 30 or above 70 suggests the yield may change direction.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell