Pace of rise in U.S. bond yields 'unsettling' - bond managers

Reuters reports that according to several major bond fund managers, the recent pace of the rise in yields in the U.S. Treasury market has been unsettling.

Managers also cited some issues with liquidity as yields have moved upwards, with the 10-year Treasury yield up 80 basis points since January. It reached a 14-month high of 1.754% this week.

Some analysts have compared the rise in yields to the 2013 “taper tantrum”, when 10-year yields jumped 136 basis points to 3.06%, according to Rabobank.

“This isn’t a market for bond math and market geeks,” said Gregory Peters, head of multi-sector and strategy for PGIM Fixed Income. “It’s not so much the rise in interest rates as it is the volatility and swiftness that’s unsettling. There is real momentum around it.”

“(The 10-year yield) could go as high as 2% and that’s really not more than a few trading days away at this point,” said Gregory Whiteley, a portfolio manager at DoubleLine.

Fed Chair Jerome Powell has thus far brushed off concerns that the recent surge in U.S. Treasury yields might spell trouble for the central bank’s extended easy monetary policy. But a rapid move higher, which can raise borrowing costs for companies and consumers, could eventually compel them to reconsider, said Whiteley.