U.S. Treasury yields rose overnight on Friday’s trade amid signs of reflationary forces brewing in the world’s second largest economy.
What are Treasurys doing?
The 10-year Treasury note yield
rose 4.3 basis points to 1.675%. The 2-year note rate
gained around a basis point to 0.161%, while the 30-year bond yield
stood at 2.350%, up 2.8 basis points from Thursday.
What’s driving Treasurys?
The bond market grappled with inflation fears at the end of the week, following economic data showing factory prices in China had risen the most in over two years as businesses looked to pass on higher raw material costs.
Chinese producer prices grew by 4.4% in March year-over-year, though consumer prices saw a more muted increase of 0.4%.
Investors have shown increased attention to more supply-driven sources of inflation this year amid reports of gummed-up supply chains, climbing commodity prices and a surge in shipping costs.
In U.S. economic data, a gauge of wholesale prices for last month are due at 8:30 a.m. ET
What did market participants say?
“The largest increase in factory gate prices for almost 3 years hit risk sentiment, with Asian markets drifting lower on Friday, and will capture the attention of global policy makers already concerned amount rising inflationary pressures. As the world’s largest exporter, there is growing risk China could ‘export’ such inflation to the rest of the world,” said John Leiper, Chief Investment Officer at Tavistock Wealth.