Treasuries outlook: debt yields rise, 30-year yield falls for 4th straight week

US Treasury debt yields rose from six-week lows on Friday, backed by a surge in oil prices and Federal Reserve Chair Janet Yellen's comments on interest-rate hikes, but fell for the second consecutive week with 30-year bond yields falling for the fourth week in a row. Crude oil futures surged about 6 percent as encouraging economic indicators in the United States and Europe boosted hopes of rising demand.
"We seem to be being pulled in a lot of different directions for a variety of reasons," said Societe Generale head of US rates strategy Subadra Rajappa. "But I would say that the correlation with oil is number one on the list." After Thursday's market close, Yellen said in a rare appearance with former Fed chairmen Ben Bernanke, Alan Greenspan and Paul Volcker that the US economy was close to full strength. She said inflation would not be held down much longer by the strong dollar and low oil prices, putting the central bank on track for further rate hikes.
Yellen had warned last week that tepid global growth could threaten the US economy, saying the Fed should look to "cautiously" raise rates. The warnings echoed sentiment expressed after the March 16 Federal Open Market Committee meeting and have pushed investors' focus to happenings outside the US, analysts said. "Before it was all about China and an intense focus on various data points. More recently it's been Japan," said Raman Srivastava, deputy chief investment officer at Standish, a BNY Mellon investment company.
Early Friday, Japanese Finance Minister Taro Aso warned that rapid currency moves were "undesirable." He said the yen's recent rally that led to a 17-month high against the dollar on Thursday was "one-sided" and that Japan would take steps as needed to address it. Benchmark 10-year Treasuries fell 8/32 in price as their yields rose nearly 3 basis points to 1.716 percent. Those yields had fallen to their lowest since February 24 on Thursday. Prices on 30-year Treasuries fell by 23/32 with yields rising 3 basis points to 2.549 percent.