US government-bond yields rose into the close on Monday, led by the long end. The 10-year par yield settled at 5.31%, up 3 basis points on Friday’s 5.28%, the highest close in a year according to the Wall Street Journal and near the highest since 2007 according to Yahoo Finance. The 30-year closed at 5.66%, up 3bp, and the 20-year at 5.70%. The short end barely moved: the 2-year closed at 4.84%, up 2bp, and the 5-year at 5.06%, up 1bp. The 10-year TIPS real yield closed at 2.95%, implying a breakeven inflation rate of about 2.36%.
The pattern is a bear steepening driven by the back of the curve, which points to supply and term-premium repricing rather than a renewed repricing of the Fed’s near-term path. CNBC attributed the move in part to rising fiscal worries. The move sets up the week’s supply test: $58bn of 3-year notes Tuesday, $39bn of 10-years Wednesday and $22bn of 30-years Thursday against yields already at multi-year highs.