One of the problems with the market we have been highlighting over the last several weeks has been the equity market’s inability to hang on to early gains. Whether or not stocks trade higher at the open, the trend throughout the trading day has been lower. In the Treasury market, we have seen a similar trend as investors take any opportunity they can get to dump long-term paper. Since the direction of treasury prices has the opposite impact on yields, this has resulted in some strong upward momentum for treasury yields.
Take the last week or so, for example. If today’s increase in yields holds, the yield on the 10-year US Treasury will have finished the day higher than it opened for six straight days. This helped to push the yield above the ‘dreaded’ 3% threshold. Similar runs of strong intraday increases in the 10-year yield have been relatively uncommon over the last twenty years with the current streak being the 19th such streak of six or more days. The longest streak of consecutive open to close increases in the 10-year yield lasted nine trading days in the period ending in June 2006, and the most recent streak of six or more days was exactly two years ago today!