Two-year Treasury yield hits highest since 2008 as Yellen looms

Washington (Mar 3)  Yields on Treasury bonds edged up Friday, continuing their recent advance, ahead of a parade of speeches by key Federal Reserve officials, headlined by Chairwoman Janet Yellen, who could provide confirmation that an interest-rate increase as early as mid-March is likely.

Yields have been in an upswing of late, with the two-year Treasury experiencing pronounced moves as the perceived odds for a March rate increase increased. The U.S. 2 Year Treasury Note TMUBMUSD02Y, -0.56%  rose 1 basis point to 1.32% and hit its highest level since 2008.

Bond yields move inversely with bond prices, which have sold off sharply this week. Short-term bond yields tend to be more sensitive to expectations of rising borrowing costs.

According to CME Group data, the probability of a move on rates has reached 77.5%, up from around 30% last week. The increased expectations followed comments from Fed officials—including New York Fed President William Dudley and San Francisco Fed President John Williams—indicated increased confidence in such a move.

A number of Fed speakers will speak on Friday, and their comments will be closely monitored for any detail about the March 14-15 meeting. Yellen will be in particular view, when she speaks to The Executives Club of Chicago at 1 p.m. Eastern. Four other Fed officials are also slated to speak today.

In other government bonds, the yield on the 10-year Treasury note TMUBMUSD10Y, +0.70%  rose less than one basis point to 2.49%. The yield has spiked significantly from an all-time low of 1.36% hit in July, and for the week.

The U.S. 30-year Treasury bond TMUBMUSD30Y, +0.50%  yielded 3.07%, essentially unchanged on the day.

Source: MarketWatch