(New across)
NEW YORK, Dec. 31 (Reuters) – U.S. Treasury yields fell Thursday, the last trading day of the year, pulling the yield curve flatter, as the market shifted thinly.
Yield on bonds fell long ago despite an unexpected fall in unemployment claims for a second straight week. The decline counteracted recent trends of higher long-term yields and a downturn in the Treasury curve in the hope that vaccine distribution would help end the economically contagious coronavirus pandemic. the universe was crushed and forced to kill nearly 2 million people.
While yield with a longer date has risen since hitting lows in March, the 10-year yield to the end of 2020 came down 100 basis points and the 30-year yield ended the year down 74 foundation point. The two-year yield, which has been anchored since the Federal Reserve cut interest rates to near zero, came the year down 144 basis points.
The two-acre yield has allowed the yield curve – as measured by the spread between the two- and 10-year yields – to go up by 44.8 basis points this year. The two-year yield is likely to remain close to the current level of 0.123% until the Fed changes its interest rate policy.
Long-term yields could continue to rise – the general trend they have followed from a low in August – if economic data improves in the new year.
Initial claims for state unemployment benefits slipped to 787,000 seasonally adjusted for the week ending Dec. 26, from 806,000 in the previous week, the Department of Labor said Thursday.
“The numbers of weekly claims left little hope for a positive non-farm payroll within just over a week,” said Bill O’Donnell, rates strategy at Citigroup.
The government will release its monthly jobs report on January 8th.
The 10-year benchmark yield on Thursday fell 1 basis point to 0.917%, slowing the spread between the two- and 10-year yields down to 79.2 basis points, the lowest level in a week. The yield on the 30-year bond last fell 1.6 basis points at 1.646%.
While the fall in jobless claims is a good sign for the U.S. economy, the thin trade volume gave the Treasury market response to the data. With few people in office, an early closure of the Treasury market on Thursday and some international markets already closed on the New Year’s holiday on Friday, yields were driven by one-time trades rather than more trends. wider.
“The size of the Treasury over 35% was on average around 35% with some key markets closed,” said O’Donnell. (Reporting by Kate Duguid Edited by Leslie Adler)