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Treasury Yields Rise With 30-Year Near 5% Amid Global Bond Slump

(Bloomberg) -- US Treasuries were under pressure amid a rout in long-dated European bonds and a surging calendar of corporate debt sales as traders returned from the holiday long weekend.

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Benchmark yields were around 5 basis points higher across the curve, ahead of ISM manufacturing data due at 10 am in New York. The Treasury market starts an important week of economic data, including the August employment report on Friday that stands to determine to what extent the Federal Reserve will resume a widely expected easing cycle in September.

“The bond market is telling you, not just here but everywhere else, it is worried about the path that we are on,” Kathy Jones, chief fixed income strategist at Charles Schwab & Co, told Bloomberg TV. “The market will continue to price in a higher term premium until we get some sort of coherent policy or a signal that the economy is slowing down. We might get that in the jobs report.”

A surge in UK and European 30-year yields helped drive the US benchmark just shy of 5%, before buyers emerged, with a number of block trades taking place in futures. Trades included a buyer of 10,000 10-year note contracts, helping pull yields off the highs of the day around 9am New York.

“The 30 year bonds may just be stalling a little here against 5%,” said John Briggs, head of US rates strategy at Nataxis North America. “I don’t think it’s a magical number at all and I have had some serious concerns for the last week or two about global long ends.”

Briggs said a US interest rate cut into high inflation would be “a pretty simple recipe for steeper curves.”