Treasury Yields Rise as Stocks Pullback

 

10-Year Yield Back Above 2.90%

Treasurys sold off 1-4bps in a bear steepening pattern today as a combination of surging commodity prices, easing geopolitical tensions and rising rates abroad impacted US bond markets.  The yield on the 10-year note closed near 2.91% (+4bps) — its highest level since February.  Fed fund futures also reflected increased expectations for the number of rate hikes in 2018.  The probability of two additional rate hikes for the remainder of the year climbed above 82% (66% last week), while the chances for a total of four hikes during 2018 rose to nearly 45%.  

 

 

WTI crude futures rose to almost $70/barrel early in the day before paring gains later in the session, with the commodity’s trading largely tied to rumors from the closed door OPEC-led meeting in Saudi Arabia.  It was reported that the members of the global production-cutting faction expect supply to match demand by as early as this June, with the worldwide surplus currently near its five-year average and a few participants now becoming concerned over rising prices.   

 

 

Stocks Struggle

Major US stock indices declined for the first time this week, with the tech-heavy Nasdaq falling 0.8%, S&P 500 sliding 0.6% and DJIA shedding 0.35%.  Much of the weakness was attributed to the technology sector, which was weighed down by a lower-than-expected earnings forecast from Asian chipmaker Taiwan Semiconductor Manufacturing.  Overall, today’s equity losses were largely mitigated by a report from Bloomberg News later in the day which revealed that Deputy Attorney General Rod Rosenstein had informed President Trump that is not the target of the ongoing investigation by special counsel Robert Mueller.

 

 

Jobless Claims Remain Steady

Today’s economic data releases were highlighted by a report from the Labor Department, which showed initial jobless claims in the US holding at levels associated with a robust labor market (sub 300,000) for a 163rd straight week.  The number of new claims for the week ended April 14th fell 1,000 to a seasonally adjusted 232,000 (230,000 expected), and the four-week moving average of claims increased by 1,250 to 231,250.  Also detailed in the report, the number of continuing claims decreased by 15,000 to 1.863 million for the week ended April 7th.