10-year Treasury yield holds above 1.4% after spike that unnerved investors

US News

The 10-year U.S. Treasury yield retreated on Friday morning, but remained above the 1.4% mark, after surging to 1.6% in the previous session.

The yield on the benchmark 10-year Treasury note dipped to 1.489% at 3:30 a.m. ET. The yield on the 30-year Treasury bond fell to 2.276%. Yields move inversely to prices.

On Thursday, the 10-year yield jumped more than 16 basis points to 1.614%, its highest level since February 2020 and more than half a percentage point up on the end of January.

The spike in the yield, which is used as a benchmark for mortgage rates and auto loans, has been driven by expectations of improving economic conditions as coronavirus vaccines are rolled out, as well as fears of higher inflation.

The U.S. House of Representatives is set to approve the $1.9 trillion Covid relief spending package by Friday, bolstering expectations of economic recovery.

However Wells Fargo strategists said in a note Thursday that they believed “the odds have been increased the Fed will have to attempt to talk down the recent move higher in rates.”

Meanwhile, Hans Mikkelsen, credit strategist at Bank of America, said that since the summer economists had “consistently underestimated economic growth to an extent never seen before.”

“There appears a real risk the Fed is not going to be able to sound dovish much longer and that transition could see wider credit spreads,” he said.

Looking ahead, data measuring growth in U.S. personal income and spending in January is due to be released at 8:30 a.m. ET on Friday.

January data for personal consumer expenditures, which tracks the changes in the cost of good and services purchased by consumers and is the Federal Reserve’s preferred inflation measure, is also due out at 8:30 a.m. ET.

The University of Michigan’s final readings on U.S. consumer sentiment for February are expected out at 10 a.m. ET.

There are no auctions due to be held on Friday.

CNBC’s Patti Domm and Bob Pisani contributed to this report.

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