Treasurys

U.S. Treasuries gained, bouncing back from an initial wave of selling after consumer-price inflation accelerated at the fastest annual pace in four decades in December.

The bond selloff that pushed 10-year Treasury yields to their highest in two years may not lead to a full-on taper tantrum, according to one of the biggest Treasury options market makers.

The rapid wage growth underscored the case for a more aggressive tightening by the Fed and capped a punishing week in the bond market.

The municipal market has a history of outperforming during periods when the Fed hikes rates, because as yields rise, the tax-free interest that munis pay makes them more attractive.

The selloff worsened after minutes from the Federal Reserve’s latest meeting showed officials considering earlier and faster interest-rate increases than expected.

Treasury yields rose a second day amid increasing conviction that the Federal Reserve will raise rates at least three times beginning in May.

The crosscurrents of persistently high inflation and the pandemic’s refusal to go away have caused large daily swings in yield, indicative of poor liquidity.

Investors in need of an alternative to certain T-bills are flocking to the Federal Reserve’s facility for reverse repurchase agreements. That’s adding to demand created by T-bill supply cuts.

Federal Reserve Chairman Jerome Powell said the market dislocations of the past year resulting from the pandemic had changed the impact that the supplementary leverage ratio was having on the largest banks. After temporarily easing the requirement, the central bank is considering longer-term reforms.

The 10-year Treasury yield fell below 1.5% for the first time in a month while the rate on the U.S. long bond dropped to a level unseen since early March.