The US Treasury’s 10-year yield fell on Friday morning, but remained above the 1.4% mark, after rising to 1.6% in the previous session.
The yield on the 10-year reference Treasury note fell to 1.489% at 3:30 ET. Yield on 30-year Treasury bonds fell to 2.276%. Yields move inversely to prices.
On Thursday, the 10-year yield jumped more than 16 basis points to 1.614%, its highest level since February 2020 and more than half a percentage point at the end of January.
The move angered investors and put pressure on the stock markets, with Nasdaq suffering its worst loss in one day since October.
The 10-year increase in income, which is used as a benchmark for mortgage and auto loan rates, was driven by expectations of improved economic conditions with the launch of coronavirus vaccines, as well as fears of higher inflation.
The US House of Representatives is expected to approve Covid’s $ 1.9 trillion relief spending package by Friday, reinforcing expectations of economic recovery.
However, Wells Fargo strategists said in a note on Thursday that they believe “the chances have increased that the Fed will have to try to slow the recent rate hike”.
Meanwhile, Hans Mikkelsen, a credit strategist at Bank of America, said that since the summer, economists “systematically underestimated economic growth in a way never seen before.”
“There seems to be a real risk that the Fed will not be able to sound dovish for much longer and that the transition may have wider credit spreads,” he said.
Looking ahead, data that measures growth in U.S. personal income and spending in January is due to be released at 8:30 am (Eastern Time) on Friday.
January data for personal consumer spending, which tracks changes in the cost of goods and services purchased by consumers and is the Federal Reserve’s preferred inflation measure, is also due to be released at 8:30 am ET.
The University of Michigan’s final readings on U.S. consumer sentiment in February are expected at 10am ET.
There are no auctions scheduled for Friday.
– Patti Domm and Bob Pisani of CNBC contributed to this report.