Fixed income

Global yields rose on Thursday as markets around the world adjusted to central banks keeping interest rates higher for longer, with the US two-year yield briefly exceeding 5% for the first time since November.

Traders ceased fully pricing in a Fed rate cut before September after the March employment report revealed that US payrolls expanded by the most in nearly a year.

Treasuries fell across the curve after data showed manufacturing unexpectedly expanded for the first time since September 2022 — while input costs climbed.

Treasuries fell across the US curve, with shorter maturities leading the way after Federal Reserve Governor Christopher Waller said he wants to see "at least a couple months of better inflation data" before cutting rates.

Treasury yields retreat from 2024 highs with month-end in view

The trend gained momentum this week, when there was strong demand for contracts wagering that 10-year yields will breach 4.5%, a level they haven't exceeded since November.

Treasuries sold off, with two-year yields hitting the highest since before the December central bank "pivot." Swap traders ratcheted down their expectations for a Fed cut before July.

Indeed, investors are also positioning for Friday's consumer-price index revisions because of what happened a year ago: the update was significant enough to cast doubt on overall inflation progress.

Yields across the maturity spectrum climbed as much as 10 basis points on the day, reaching session highs after the ISM gauge of service-sector activity for January exceeded economist estimates.

Investors tightening their credit pocketbooks is creating opportunities for lenders. Firms like Värde can step into the gap, buying assets from banks and investing in fixed income.