U.S. Treasury yields edged higher on Wednesday, extending the steep selloff in the last two days, as investors braced for wholesale inflation data and the second bond auction of the week.
What are Treasurys doing?
The 10-year Treasury note yield
was up 1.1 basis points to 1.713%, around its highest levels in a month. The 2-year note rate
was unchanged at 1.664%, while the 30-year bond yield
was up 0.8 basis point to 2.189%.
What’s driving Treasurys?
Investors are eyeing the European Central Back’s meeting on Thursday where policy makers are expected to agree to some stimulus measures including additional bond purchases. It’s unclear, however, if the ECB can launch an aggressive stimulus package amid criticism within its own ranks over the efficacy of negative rates.
Growing doubts about whether the ECB will be as dovish as once expected by investors has undermined appetite for long-term European and U.S. government paper in the past few sessions, helping to arrest the sharp plunge in global bond yields.
The German 10-year government bond yield
has backed up to negative 0.56%, after trading as low as negative 0.72% last week.
In economic data, U.S. producer prices for August are set for release at 8:30 a.m. Eastern. The U.S. Treasury Department will also sell $24 billion of 10-year notes later at 1 p.m., which could serve as an additional impetus for trading.
What did market participants’ say?
“The rather sharp move up in rates over the past week might only be a dress rehearsal if the ECB hawks win out,” said Peter Boockvar, chief investment officer at the Bleakley Advisory Group.