Treasurys

The yield on 30-year securities has climbed almost 25 basis points over the past three sessions, returning it to levels last seen in mid-November when inflation was still above 7%, more than double the current rate. Ten-year borrowing costs rose to around 4.15%. 

In their latest assessment of the bond market outlook, Morgan Stanley strategists are challenging the former head of the Federal Reserve Bank of New York's view that losses are likely to deepen.

Investors are piling into longer-dated notes on bets that policy makers will succeed in taming inflation, an outcome that will deliver strong and stable returns on debt.

Excess returns on the bonds, which compares mortgage backed security performance to Treasuries, are -0.94% for March, on track for the worst relative performance since September.

The U.S. Supreme Court turned away four appeals from shareholders of the government-sponsored enterprises who said they were entitled to compensation after the Treasury collected more than $100 billion in profits from the government-sponsored enterprises.

The Treasuries market is girding for potential disruptions from the next and trickiest stage of policymakers’ tightening campaign: the shrinking of an $8.5 trillion bond portfolio.

Yields have jumped so much this year, nearly doubling those on 10-year Treasuries, that it recalls past buying opportunities that paid off when the tide turned.

The yield on 10-year US notes has traded in a range of at least 10 basis points in 50 of 95 trading days so far in 2022. That puts it on track for an annual rate of more than 130 episodes, which would be the highest since 2009.

U.S. Treasuries tumbled Monday, driving the yield on five-year notes to the highest level since September 2008 amid speculation persistent inflation will prompt the Federal Reserve to tighten policy more aggressively.

The selloff worsened after minutes from the Federal Reserve’s latest meeting showed officials considering earlier and faster interest-rate increases than expected.