U.S. Treasurys were little changed on Wednesday, but long-dated bonds hovered just below the 5% mark as trade policy, budget deficits and the wider economy continued to weigh on sentiment.
The yield on the 30-year Treasury bond briefly topped the 5% mark overnight before retreating. It was last down slightly to 4.964%. The long-bond yield was last at 5% in July. The yield on the benchmark 10-year Treasury was less than 1 basis point lower at 4.273%. One basis point equals 0.01% and prices move inversely to yields.
U.S. bond yields spiked on Tuesday as traders reacted to a Friday ruling from the federal appeals court that most of President Donald Trump’s new tariffs on imports are illegal. The ruling could force Washington to refund billions of dollars raised from the levies.
“Concerns around Fed independence also contributed to the bond market moves,” Deutsche Bank’s Jim Reid said in a note on Wednesday morning.
Federal Reserve Board Governor Lisa Cook has been making headlines in recent days as she attempts to have a judge temporarily block Trump from firing her from her position. On Tuesday, her lawyer hit back at the president’s reasoning for dismissing her, while almost 600 economists signed an open letter warning that her potential firing threatened the Fed’s independence from government.
U.S. 30-year yield, 1 day
Investors are worried that Trump’s attempted takeover of the Fed could lower short-term rates, but raise longer rates as investors worry about the central bank’s inflation-fighting credibility.
Outside of the United States, global government bonds sold off as jitters around government deficits and interest rates rippled through markets.
Looming over the bond market is Friday’s jobs report, which is expected to show the unemployment rate ticking higher to 4.3% and 75,000 jobs created for August, according to economists polled by Dow Jones. On Wednesday, data on job openings will be released followed by ADP’s private payrolls report on Thursday.
— CNBC’s Kevin Breuninger contributed to this report.
