Treasuries Erase Gains as Apple Joins 30-Year Issuance Parade

  • Yields rebound after following U.K. rates to session lows
  • 5-, 10- and 30-year yields test 50-day moving averages

Treasuries erased gains and were little changed in late trading after Apple Inc. joined three other companies issuing 30-year debt this week.

The 10-year yield was lower by less than a basis point at 2.464 percent at about 2:45 p.m. in New York after paring a drop of 3.9 basis points. It reached session lows in early U.S. trading concurrently with the U.K. 10-year yield, which fell as much as 8.8 basis points as market-implied odds of a Bank of England rate hike this year faded after its policy meeting and news conference.

  • The gain in gilts resembled the reaction by Treasuries to Wednesday’s Fed statement, which was less hawkish than some expected and left market-implied expectations for a March rate increase near 20 percent, judging by fed fund futures
  • 5Y, 10Y and 30Y yields traded below their 50-day moving averages before rebounding
  • 30Y yield erased a drop of 3.6bp, pushing the 5s30s curve above 116bp for first time since mid-December, extending Wednesday’s curve reaction to the FOMC statement
  • Steepening has additional support from IG issuance slate, which includes 30Y debt from Apple and Johnson Controls; Apple’s 6-part $benchmark follows jumbo deals with 30Y and 40Y tranches from Microsoft and AT&T this week
  • Yields fell even as initial jobless claims declined more than forecast to 246k (vs 250k est.); preliminary 4Q nonfarm productivity rose 1.3% (vs 1.0% est.) and unit labor costs rose 1.7% (vs 1.9% est.)

— With assistance by Edward Bolingbroke, and Brian Chappatta

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