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Treasury yields slipped Thursday morning after U.S. third-quarter GDP was revised downward slightly and data showed U.S. manufacturing-sector conditions deteriorating further.
What’s happening
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was 4.314%, down 5.3 basis points from 4.367% on Wednesday. Yields move in the opposite direction to prices. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 3.840%, down 3.6 basis points from 3.876% on Wednesday. The yield on Wednesday was the lowest since July 26. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 3.978%, down 2.6 basis points from 4.004% on Wednesday.
What’s driving markets
Data released on Thursday showed that the U.S. economy grew at a revised 4.9% annual pace in the third quarter, down from a previously reported 5.2%. It was still the biggest increase in a decade, excluding the pandemic years of 2020-21 — providing the world’s largest economy with a surprising burst of growth that has likely tapered off into the year-end.
Meanwhile, the Philadelphia Fed manufacturing index weakened further in December, falling to negative 10.5 from negative 5.9 in the prior month. Figures below zero indicate deteriorating conditions.
The bond market also rallied on Wednesday after data showed a surprising deceleration in U.K. inflation and despite the Treasury’s soft auction of 20-year bonds.
What analysts are saying
“With no pivotal data on offer and Fedspeak proving ineffectual in dialing back rate-cut pricing for 2024, it’s likely to be [the] longest trading session of the year — on a boredom-adjusted basis,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.
“Not only is there little on the immediate horizon to inspire a rethink of the prevailing macro narrative, even a modest slowing of the real economy in the beginning of 2024 would only serve to reinforce the bond bullish price action,” they wrote in a note.
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