10-year Treasury yield jumps back above 1.67% ahead of inflation data

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The 10-year U.S. Treasury yield ticked back up to 1.65% on Friday morning, after an auction of 7-year notes showed weaker appetite for longer-dated debt.

The yield on the benchmark 10-year Treasury note climbed to 1.6548% at 5:50 a.m. ET. The yield on the 30-year Treasury bond rose to 2.3757%. Yields move inversely to prices.

Treasurys

The auction of $62 billion 7-year Treasury notes on Thursday outperformed demand in a sale last month but was still weak, according to a Reuters report.

Yields were also higher after Federal Reserve Chairman Jerome Powell hinted that the central bank would eventually roll back its support for the economy.

“As we make substantial further progress toward our goals, we’ll gradually roll back the amount of Treasurys and mortgage-backed securities we’ve bought,” Powell told NPR’s “Morning Edition.”

Last week, Powell suggested that the central bank would let inflation run hotter if it helped achieve full and inclusive employment. Recent concerns about inflation have driven bond yields higher, seeing the 10-year Treasury yield top 1.7% last week.

Data released by the Labor Department on Thursday showed that the number of jobless claims filed last week also fell below 700,000 for the time since the coronavirus pandemic began just over a year ago.

Discussing whether Treasury yields could move higher still, Christian Keller, head of economics research at Barclays, told CNBC’s “Squawk Box Europe” on Friday that bond yields “have moved a lot already.”

“A lot of this has actually been through the real yields so there is an expectation for better growth in the future so that in principle we think is a good thing,” he said.

Keller explained that he expected to see “a lot” of inflation in the next few months but this would “mostly be a transitory phenomenon.”

Investors will be keeping a close eye on February’s personal consumption expenditure index, due out at 8:30 a.m. ET, which is a key measure of inflation.

Personal income and spending figures for February are expected out at 8:30 a.m. ET.

There are no auctions due to be held Friday.

CNBC’s Maggie Fitzgerald contributed to this report.

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