This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bond Brief: Yields Spike Again

Updated from 11:21 a.m. EST

The Treasury market unraveled Thursday, beaten up by government reports showing a drop in jobless claims and an increase in one of the Federal Reserve's most closely watched inflation measures, as traders got cautious ahead of Friday's personal income and spending reports.

Wall Street economists expect that personal income rose by 0.5% in February, and that personal spending edged higher by 0.1%. Two manufacturing reports are also to be released Friday, with February factory orders expected to rise by 1.3% and the March Chicago Purchasing Manufacturers Index to come in at 58.0, up from 57.0 in the previous month.

"There are more legs to this economy than most people realize," says Steve Bohlin, a portfolio manager with Thornburg Investment Management. "The Fed has been removing accommodation, and so far they really haven't been restrictive: The Fed hasn't slowed down the economy yet."

The benchmark 10-year note ended the day down 13/32 to yield 4.86%, the highest since June 2004 and significantly higher than its 2006 low of 4.29% hit in January. Bond prices and yields move in opposite directions.

The 30-year bond sank 27/32 to yield 4.90%, the highest since March 2005. The five-year lost 7/32 to yield 4.83%, the highest level since March 2002, and the two-year edged lower two ticks to yield 4.83%.

David Ader, government bond strategist at RBS Greenwich Capital, says a $1 billion 50-year bond sale by the Tennessee Valley Authority has helped push prices down on the long end.

Yields across the curve hit multiyear highs, extending losses that began after the Fed raised its overnight bank lending rate this Tuesday to 4.75% from 4.50%, its 15th straight quarter-point rate hike. Policy makers said in a statement that more tightening may be needed to contain inflation.

Gold, often considered a hedge against inflation, hit a 25-year high, which helped fuel worries that the Fed will have to maintain a hawkish stance.

Crude oil prices rose to an eight-week high and gasoline nearly touched a six-month high, prices that made inflation watchers worry. Fed policy makers have said they are closely monitoring energy prices to see if they eventually work their way into core consumer prices and "add to inflation pressures."

Underscoring Bohlin's point, the Commerce department released its second revision to fourth-quarter GDP numbers, which was upwardly revised to 1.7%, in line with Wall Street expectations.

But the core personal consumption expenditures (PCE) price index, one of the central bank's favorite inflation indicators, rose at an annual rate of 2.4% in the last quarter vs. the 2.1% pace earlier reported. The measurement of prices tied to consumer spending rose at a 1.4% annual rate in the prior quarter.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs