The U.S. Treasuries Off to Worst-Ever Start of the Year
Treasuries are off to their worst-ever start to a year and there is every chance that Friday s payrolls data will cause the selloff to accelerate.
According to a Bloomberg survey, the jobs report will show employers added 447,000 workers in December, but the so-called whisper number has already jumped to 500,000. The increase was driven by Wednesday's consensus-busting ADP Research Institute data showing U.S. companies added the most jobs in seven months.
The U.S. government securities have fallen 1.4% over the past four days, according to the Bloomberg U.S. Treasury Index, heading for the steepest opening week decline to a year in data going back to 1973. The benchmark 10 year yield has gone up 21 basis points this week, about half of the increase analysts are forecasting for the whole of 2022.
A strong print will see the market factor in hikes quantitative tightening even earlier, according to strategists at Mizuho International Plc, including Peter Chatwell. We d prefer to be positioned for higher yields and equity downside. The Federal Reserve is turning more hawkish as the omicron outbreak adds to price pressures rather than slowing economic growth, according to investors who have been dumping Treasuries due to the fact that the Federal Reserve is turning increasingly hawkish. The selloff accelerated Wednesday after the Fed minutes spurred bets that the first rate hike since the pandemic would come as soon as March.
The equivalent yield was near 1.5%, the highest level since February 2020, after traders sold two blocks of five-year Treasury futures contracts expiring in March on Friday.
Bonds shrugged off an unexpected jump in euro-area annual inflation to a new record of 5% in December, which puts pressure on European Central Bank officials who insist the current spike is temporary. German 10 year yields were steady at minus 0.06%, having touched their highest since 2019 this week.