U.S. Treasury yields fell on Thursday as investors digested comments from the U.S. Federal Reserve suggesting it could cut back on asset purchases if the economy continues to recover quickly.
The benchmark 10-year Treasury bill yield fell about five basis points to 1.634% in afternoon trading. The yield on 30-year Treasury bills fell to 2.343%. Yields move in the opposite direction to prices. (One basis point is equal to 0.01 percentage point).
The 10-year Treasury yield topped 1.68% in the previous session, after minutes from the April Fed meeting showed the central bank would reconsider its accommodative monetary policy if the economy continued to decline. improve quickly.
“A number of attendees suggested that if the economy continued to move rapidly toward the committee’s goals, it might be appropriate at some point in future meetings to start discussing a plan to adjust the pace of corporate purchases. ‘active’ indicates the meeting summary.
Dallas Fed Chairman Robert Kaplan said on Thursday he would like to see the central bank start cutting back on asset purchases as soon as possible, Reuters reported.
Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, said the surge and then the reversal in yields is a sign the move was a false start by traders trying to ensure they didn’t are not sidelined every time the Fed changes its policy.
“I think it was almost not so much about worrying about the taper as it was worrying about other people worrying about it,” Gokhman said. He added that the minutes came from a meeting that took place ahead of the weaker-than-expected April jobs report, which may have made central bankers less inclined to change their accommodative stance.
Richard Kelly, head of global strategy at TD Securities, told CNBC’s “Street Signs Europe” on Thursday that the Fed’s comments were not a sign that it was about to start declining, but that it was more of a “punch for the markets”.
He didn’t think the unraveling “would even start until next year, so it’s going to be a long way of talking at the moment”.
Since full employment is one of the Fed’s goals, investors will be watching weekly jobless claims data closely.
The latest data, released Thursday, showed 444,000 initial claims for the week ending May 15. Economists polled by Dow Jones expected 452,000 requests.
Auctions were held Thursday for $ 40 billion in 4-week bills, $ 40 billion in 8-week bills and $ 13 billion in 9-year and 8-month inflation-protected Treasury securities.
– CNBC’s Yun Li contributed to this market report.