Treasuries Fall as Markets Await Pricing of Alphabet’s $25 Billion Bond Deal
U.S. Treasuries came under pressure in morning trading and generally remained lower ahead of pricing for Alphabet’s planned $25 billion, 10-tranche corporate bond offering. Earlier, British media reported that if inflation data runs hot in the coming weeks, Federal Reserve Chair Waller is prepared to raise interest rates. Trading in SOFR and U.S. Treasury options also grew more active ahead of Friday’s U.S. nonfarm payrolls report. Shortly after 3 p.m. New York time, Treasury yields were 4 to 6 basis points higher across the curve, with shorter maturities leading the decline. The 2s10s and 5s30s spreads narrowed by 0.5 basis point and 2 basis points, respectively. The 10-year Treasury yield was about 4.67%, up 6 basis points from Wednesday’s close. At the short end of the curve, the British media report prompted markets to slightly increase expectations for rate hikes at the Federal Reserve’s next several meetings. By the December FOMC meeting, markets were pricing in about 35 basis points of cumulative rate hikes, up from 32 basis points at Wednesday’s close. The long end of the curve shifted toward a bear steepening move after news of Alphabet’s bond offering. The bonds will have maturities ranging from 2 years to 40 years. In the corporate bond market, Thursday’s issuance was the fifth-largest single-day total of the year, while the cumulative issuance for the week ranked third for the year. WTI crude futures remained strong throughout the session, also supporting higher Treasury yields. Near the close, WTI futures had eased slightly from their intraday high but were still up about 3% on the day. As of 3:46 p.m. Eastern time: The 2-year Treasury yield was 4.2454%. The 5-year Treasury yield was 4.3907%. The 10-year Treasury yield was 4.6696%. The 30-year Treasury yield was 5.2135%. The 2s10s Treasury yield spread was 42.21 basis points. The 5s30s Treasury yield spread was 82.11 basis points.
Shortly after 3 p.m. New York time, Treasury yields were 4 to 6 basis points higher across the curve, with shorter maturities leading the decline. The 2s10s and 5s30s spreads narrowed by 0.5 basis point and 2 basis points, respectively. The 10-year Treasury yield was about 4.67%, up 6 basis points from Wednesday’s close.
At the short end of the curve, the British media report prompted markets to slightly increase expectations for rate hikes at the Federal Reserve’s next several meetings. By the December FOMC meeting, markets were pricing in about 35 basis points of cumulative rate hikes, up from 32 basis points at Wednesday’s close.
The long end of the curve shifted toward a bear steepening move after news of Alphabet’s bond offering. The bonds will have maturities ranging from 2 years to 40 years. In the corporate bond market, Thursday’s issuance was the fifth-largest single-day total of the year, while the cumulative issuance for the week ranked third for the year.
WTI crude futures remained strong throughout the session, also supporting higher Treasury yields. Near the close, WTI futures had eased slightly from their intraday high but were still up about 3% on the day.
As of 3:46 p.m. Eastern time:
The 2-year Treasury yield was 4.2454%.
The 5-year Treasury yield was 4.3907%.
The 10-year Treasury yield was 4.6696%.
The 30-year Treasury yield was 5.2135%.
The 2s10s Treasury yield spread was 42.21 basis points.
The 5s30s Treasury yield spread was 82.11 basis points.