The U.S. Treasury’s ten-year yield fell on Friday morning, but remained above 1.4%, after rising to 1.6% in the previous session.
The yield on the 10-year reference cash note fell to 1.489% at 3:30 am ET. The yield on the 30-year Treasury bond fell to 2.276%. Yields are reversed to prices.
On Thursday, the ten-year yield jumped more than 16 basis points to 1.614%, its highest level since February 2020 and more than half a percentage point at the end of January.
The move upset investors and put pressure on stock markets, with the Nasdaq suffering its worst one-day loss since October.
The rise in yield to ten years, which is used as a benchmark for mortgage rates and car loans, has been driven by expectations of improving economic conditions as vaccines against coronavirus, as well as for fears of higher inflation.
The U.S. House of Representatives on Friday will approve Covid’s $ 1.9 trillion aid spending package for Friday, bolstering expectations of economic recovery.
However, Wells Fargo strategists said Thursday in a note that they believed that “the odds have increased, the Fed will have to try to reduce the recent higher movement in rates.”
Meanwhile, Bank of America credit strategist Hans Mikkelsen said that since the summer economists “had steadily underestimated economic growth to a point never seen before.”
“There seems to be a real risk that the Fed may not look much longer and that this transition may see wider credit differences,” he said.
Looking ahead, data measuring U.S. personal income and spending growth in January is due to be released Friday at 8:30 a.m.
January data on personal consumer spending, which tracks changes in the cost of goods and services purchased by consumers and which is the Federal Reserve’s preferred measure of inflation, will also be released at 8:30 a.m. ET.
The University of Michigan’s latest readings are expected on U.S. consumer sentiment during February at 10 a.m. ET.
There will be no auction on Friday.
– CNBC’s Patti Domm and Bob Pisani contributed to this report.