Por Gertrude Chavez-Dreyfuss
NEW YORK, Apr 5 (Reuters) – Most Treasury yields rose Monday in volatile session, fueled by continued optimism about the US economic outlook following Friday’s strong non-farm payroll report.
* The return curve, which has become a barometer of risk sentiment in the bond market, was steeper after flattening in the previous session. The spread between two-year and 10-year returns increased to 155 basis points.
* Trading was quiet at the start of the week, with most of Europe still on Easter Monday holidays. China, Hong Kong and Australia also closed.
* By midmorning in New York, the yield on 10-year bonds rose to 1.734%, from 1.72% at the close on Friday. The 30-year return advanced to 2.389%, from 2.37% on Friday.
* At the short end of the curve, the 2-year yield fell slightly to 0.18%, from 0.19% on Friday. At the beginning of the session, the 2-year yields reached 0.194%, the same level of the end of February which was a high of around eight months.
* Monday’s data continued to support the trend of higher bond yields, with a US services sector index rising to an all-time high of 63.7. Factory orders, which fell more than expected in February, did little to put pressure on rates.
* Market direction held after a stronger-than-expected employment report for March. Data on Friday showed nonfarm payrolls increased by 916,000 last month, the biggest gain since August. Figures for February were revised up to show 468,000 jobs created, instead of the 379,000 initially reported.
* The Eurodollar futures market, which follows short-term interest rate expectations, has fully discounted an interest rate hike in the United States for December 2022, earlier than the fourth quarter of 2023 seen a few months ago.
(Report by Gertrude Chavez-Dreyfuss, Edited in Spanish by Manuel Farías)