Feb 7, 2022 - Economy & Business

Treasury yields soar after strong jobs report

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

The strong jobs report Friday morning drove a violent rise in Treasury bond yields, as more investors came around to the view that the Fed might be able to sustainably put the rock-bottom rates of recent years in the rearview mirror.

Driving the news: Yields on the 10-year Treasury note climbed above 1.9%, the highest since late 2019.

Why it matters: Yields on Treasury bonds are the foundation for interest rates on everything from corporate bonds to car loans and mortgages.

  • They essentially determine the cost of borrowing across the economy — and those costs are clearly going up.

Flashback: Since last November, the Fed has been signaling that it would raise the short-term interest rates it controls, and begin a new, long-term hiking cycle as it seeks to clamp down on inflation.

The bottom line: The rise in longer-term Treasury yields suggests that investors, who were skeptical that the Fed would be able to sustain a rate hiking cycle over time, are starting to change their minds.

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