Treasuries Are Taking A Big Hit This Morning

The biggest story of the week in global markets has been the swift rise in U.S. Treasury yields as investors have unloaded their bond holdings.

Earlier this week, the market saw its highest daily trading volume ever, and yields hit their highest levels in over a year.

This morning, bonds are selling off again, and the yield on the 10-year Treasury bond has risen 5 basis points to 2.16%, pushing toward a new high, as the chart below illustrates.

Business Insider/Matthew Boesler, data from Bloomberg

The chart below shows price action in 10-year Treasury futures this morning. They really started selling off when the stock market opened at 9:30 AM ET, and continued to tumble after positive surprises from the Chicago PMI and University of Michigan consumer confidence releases at 9:45 and 9:55, respectively.

Now, they are trading down 0.4% on the day.

Thinkorswim

Lately, one of the themes in the Treasury market has been increased sensitivity to economic data releases.

Because the Federal Reserve has bought up so much of the bond market through quantitative easing programs designed to provide monetary stimulus in recent years, the effects of weekly and monthly changes in economic data on bond prices have been diminished.

However, since the Fed introduced the "Evans rule" at its December monetary policy meeting, which ties the outlook for when the central bank will begin tightening stimulus directly to economic data benchmarks, bond prices have become more reactive to the data.

Please follow Money Game on Twitter and Facebook.
Follow Matthew Boesler on Twitter. Tags: Bond Market, Treasuries | Get Alerts for these topics »

To embed this post, copy the code below and paste into your website or blog.

View the original article here