“Treasury 10-year notes fell for a second quarter, the first back-to-back drop in two years, as investors sought higher-yielding assets amid improved economic data and a Federal Reserve pledge to maintain monetary stimulus.
Yields on the benchmark securities reached 11-month highs as the U.S. unemployment rateunexpectedly fell in February and employers added more jobs than forecast. Payrolls also swelled in March, a report next week may show. The rise in yields was tempered as the bailout of Cyprus and political turmoil in Italy renewed the haven appeal of U.S. government debt.
“The U.S. economic data was stronger in the first quarter than in the fourth, and it has confirmed the notion that while we are not into a roaring recovery, the U.S. economy seems to be on somewhat better footing,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut.
The U.S. 10-year yield increased nine basis points, or 0.09 percentage point, from January through March to 1.85 percent. It touched 2.08 percent on March 8, the highest since April 5, 2012. The yield climbed 12 basis points from October through December. Its last two-quarter rise ended in March 2011.
Ten-year yields fell eight basis points this week in New York, according to Bloomberg Bond Trader prices.
For the benchmark yield to rise to a Bloomberg survey’s median year-end estimate of 2.25 percent, “we will have to see the employment market improve, the situation in Europe subside and the end of the Fed’s quantitative-easing program become apparent,” Lyngen said.