10-year Treasury yield is little changed as Fed's Waller says more hikes needed, investors await 30-year auction

• The 10-year Treasury yield climbed to 5.292%, near its highest level since 2002, while the 30-year yield held steady at 5.661% just below a 24-year high
• At Wednesday's $39 billion 10-year note auction, global central banks purchased over 80% of the offering, well above the 72.4% average, despite it being the highest-yielding 10-year auction since November 2000
• Weekly jobless claims came in at 197,000, below the 200,000 forecast, while investors expect the Fed to hold rates steady at its October 28 meeting before hiking again on December 9

Summary

Market Movement:

U.S. Treasury yields rose Thursday, with the 10-year yield climbing to 5.292% (up 1 basis point), approaching its highest level since 2002. The 2-year note yield increased 4 basis points to 4.804%, while the 30-year bond yield remained flat at 5.661%, near a 24-year high.

Federal Reserve Policy:

Fed Governor Christopher Waller signaled additional rate hikes are necessary to control inflation, which has remained above the Fed's 2% target for approximately 5.5 years. However, Waller suggested hikes don't need to occur at consecutive meetings but should be implemented "in an acceptable period of time." Markets anticipate the Fed will hold rates steady at its October 28 meeting and implement another increase on December 9.

Treasury Auctions:

The Treasury Department conducted its third auction of the week Thursday, selling $22 billion in 30-year bonds. Wednesday's $39 billion 10-year note auction saw strong demand, with global central banks representing over 80% of purchases—above the 72.4% average. This was the highest-yielding 10-year auction since November 2000. BMO Capital Markets noted the 30-year auction would serve as "the next barometer of demand for US debt in an environment of global deficit angst."

Economic Data:

Weekly jobless claims for the week ended October 3 came in at 197,000, down 2,000 from the previous week and below the 200,000 consensus estimate, indicating continued labor market strength.