Treasury yield curve not upbeat enough for bond markets

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Nov. 27 2019, Updated 2:20 p.m. ET

Bond markets react to Jobs Friday and other employment data

The Treasury yield curve for five-year to 30-year maturities edged down slightly in the week ending November 7. Stock markets (DIA) (SPY) (QQQ) read a bullish slant to October’s employment report released on Friday, November 7 (refer to the previous section) with record highs in the S&P 500 Index (IVV) and the Dow Jones Industrial Average (DIA) on Friday.

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But bond markets (BND) (TLT) didn’t judge the data to be upbeat enough for the Fed to bring forward its schedule for rates increases. The benchmark ten-year Treasury (or UST) (IEF) yields and 30-year Treasury yields fell by seven and five basis points, respectively, on Friday, November 7. Dialed-down expectations for an increase in the Federal funds rate caused Treasury yields between two-year and 30-year maturities to decline on Friday.

Treasury ETFs see positive returns

The Treasury yield curve for five-year to 30-year maturities moved lower in the week ending November 7. This was primarily due to a relatively disappointing employment report (Part 7) for October. The benchmark ten-year Treasury (IEF) yields as well as 30-year Treasury yields both fell by three basis points over the week ended November 7. Ten-year Treasuries were yielding 2.32% on Friday, while 30-year (TLT) Treasuries yielded 3.04%.

This benefited the prices of exchange-traded funds (or ETFs) such as the iShares 20+ Year Treasury Bond ETF (TLT), the iShares 7-10 Year Treasury Bond ETF (IEF), and the ProShares Ultra 7-10 Year Treasury ETF (UST), which rose by 0.7%, 0.3%, and 0.6%, respectively, over the week.

The next section will cover secondary market trends in the high-quality corporate bonds segment.

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