Last week the 10-year Treasury rate pierced the 3% level before falling back to 2.96% by the end of the week. This marks the first time the 10-year Treasury has been above 3% since 2013. This week, the bond market will have significant market moving data to digest. The Federal Reserve (Fed) meets and is expected to keep short term interest rates unchanged. Despite the rate expectation, the market will be closely scrutinizing the Fed’s language about the potential for a rate increase at its next meeting. On Wednesday the Treasury Department will announce its upcoming debt issuance plans. Particular interest will be on the size of the 10- and 30-year auctions given the increase in budget deficits. On Friday the April Employment Report will be released and job growth is expected to remain solid. The unemployment rate is anticipated to fall to 4.0% and wage growth to remain near its high in recent years. The bearish case for bonds looks firmly in place as upcoming data supports higher Treasury rates.
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