Treasury yields jump after Q1 GDP

The US Treasury market is under pressure following the advanced release of first quarter GDP. The US economy grew at an annualized rate of 0.7%, missing economist expectations of 1% growth. A deeper look into the numbers shows the employment cost index rose 0.8%, its fastest pace since the first quarter of 2008, and core PCE climbed at a 2.0% clip. Here’s a look at the scoreboard as of 8:46 a.m. ET.

  • 2-year +2 bps @ 1.278%
  • 3-year +2.7 bps @ 1.465%
  • 5-year +3bps @ 1.852%
  • 7-year +3bps @ 2.135%
  • 10-year +3bps @ 2.324%
  • 30-year +2.5bps @ 2.990%

Selling has yields across the curve up between 2 and 3 basis points, and approaching their highest levels in three weeks.

Traders believe Friday’s data has improved the chances the Fed will hike rates at one of its next two meetings. World Interest Rate Probability data provided by Bloomberg shows a 70.2% chance the Fed hikes by 25 bps at either its May or June meeting. That’s up slightly from the 69.7% probability ahead of the report.

The data is having little impact on the yield curve as the 5-30-year spread holds near 114 bps, its highest level since the end of February.

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