Treasuries on course for the worst year on record

U.S. Treasury yields rose again for the eleventh straight week after data showed firm demand in labor market despite rate hikes. Consequently, the Fed will likely stick to its plan to quash the surge in inflation.

The benchmark 10-year U.S. Treasury yield jumped from 3.83% to 3.89% week-over-week, its highest level since 2008, while the 2-year T-note climbed to 4.31%. The S&P U.S. Treasury Bond Index is down 11.72% year-to-date.

In Europe, the German 10-year yield added 8 basis points (2.19%). The French 10-year OAT yield closed at 2.80% (+7 basis points). Italy’s 10-year bond yield hit its highest since November 2012 at 4.70% (+19 basis points).

Bonds of top-rated U.S. and European companies also finished the week in the red, down 0.07% and 0.11% respectively (down 21.04% and 14.37% for the year – proxied by the Bloomberg Barclays Global Aggregate Corporate Bond TR Index in USD and the Markit iBoxx Euro Liquid Corporates TR Index).

By contrast, high-yield bonds bounced back, with the Markit iBoxx EUR Liquid High Yield TR Index up 0.76% (-12.98% YTD) and the Markit iBoxx USD Liquid High Yield Capped TR Index up 1.37% (-11.31% YTD).

Emerging debt in local currencies followed suit, up 0.57% (-20.75% YTD) while the U.S. Dollar Index edged up above the 112.5 mark (112.63).