U.S. Treasury Yields declined slightly on Friday as trader digested the job report. The yield on the benchmark 10-year Treasury note was trading at 2.59% on Friday morning after hitting 2.6% on Thursday. The benchmark yield had jumped dramatically in the past two weeks due to expectation for higher interest rate this month and higher energy-led inflation.
This come after billionaire Bill Gross’s comments earlier this year that bad things may happen in the fixed income market if the 10-year Treasury yield break 2.6 percent level.
In January, Gross told investors in his monthly letter: "If 2.6 percent is broken on the upside ... a secular bear bond market has begun…Watch the 2.6 percent level. Much more important than Dow 20,000. Much more important than $60-a-barrel oil. Much more important than dollar/euro parity at 1.00. It is the key to interest rate levels and perhaps stock prices in 2017.
The selloff in bond market sparked investors’ concerns that the Treasury is entering in a bear market. Expectation for higher inflation due to President Donald Trump’s fiscal stimulus plan may push bond yield higher. Yields move inversely to prices.
"I don't think it tips us into a bond recession," said Jay Schechter, partner and senior advisor at Singer Xenos Wealth Management. "I just think it's a normal process based on where yields have been and have been and where they're going."