Yields marched higher on Friday, with the yield on the 2-year Treasury notching a new 15-year high as markets assessed what the Federal Reserve’s latest rate hike means for the economy going forward.
The policy-sensitive 2-year Treasury hovered above 4.2%, hitting a 15-year high of 4.266% earlier in the session. It last traded up 12 basis points to 4.246%. Meanwhile, the yield on the 10-year last traded 9 basis points higher at 3.801% and near levels not seen since 2011.
Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.
September flash PMI data is set to be released on Friday, giving markets preliminary insight into the economic state of the manufacturing and services industries for the month. PMI data is used as a key indicator for inflation and recession concerns as it reflects whether industries are growing or shrinking, as well as supply and demand.
Analysts are expecting the services sector to inch higher after contracting sharply in August. Meanwhile, growth in the manufacturing industry is set to drop, after slowing down close to 2020 levels last month.
Markets are also digesting the Federal Reserve’s 75 basis point interest rate hike that was announced on Wednesday as the central bank tries to curb inflation. Federal Reserve chairman Jerome Powell is set to give a speech with further insights on Friday.