Dow Jones – US Treasury prices fell, pulling yields higher, on Friday, taking a cue from a sell-off in the European government bond market after data showed the eurozone's economic recovery continues apace.
The yield on 10-year US Treasuries rose to 2.376% from 2.333%, while the 30-year bond yield rose to 2.861% from 2.808%.
Strong economic data out of the eurozone underlined the currency bloc's continued recovery. That could mean the European Central Bank (ECB) would become more aggressive in winding down its monetary stimulus program.
The ECB recently pledged to continue asset purchases at €30bn per month from the beginning of 2018, already a marked reduction from the current €60bn per month pace.
Investors are also watching the progress of legislation to overhaul the US tax code amid differences between the bills proposed by the House Republicans and their Senate counterparts.
"The curve flattening move that took place over the last eight days is being unwound in a massive way. Many fear of more downside in prices as Euro-Govies are on as uneasy footing as US Treasuries at the moment," said Tom di Galoma, managing director of Treasuries trading at Seaport Global Securities.
The so-called yield curve, which traces maturities against respective bond yields, has flattened in the past two weeks on concerns that the Federal Reserve would raise rates against a backdrop of tepid inflation.