Following a better-than-expected retail sales data for September, U.S. Treasury rates ticked-up on Thursday, underscoring growing economic optimism and anticipation that the Federal Reserve could land softly. More sensitive to rate fluctuations, the U.S. 2-Year Treasury yield (US2Y) rose 5 basis points to 4.00%; the 10-Year Treasury yield (US10Y) also gained 5 basis points, hitting 4.07%.
Moreover, its important to note that both rates are back over 4.00%; the US 10Y is above its 100-day moving average, suggesting more bond market strength. Rising beyond the 0.3% projection, the retail sales report showed a 0.4% increase in September, following August's 0.1% expansion. Also, with investors selling off bonds and raising rates, the better sales record improved market sentiment. Additionally, bond prices fluctuate inversely as yields climb, therefore exerting downward pressure.
The increase in rates has resulted in traders greater attention to Treasury and fixed-income ETFs as they continue to adapt to the evolving dynamics of the bond market. These days, investors are watching how this will affect future Federal Reserve rulings on inflation control and interest rate policies.
