10-year Treasury yield tops 2.6% for first time since mid-December

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A sell-off in US government bonds continued on Thursday afternoon, sending the yield on the 10-year Treasury note above 2.6 per cent for the first time in 2017.

The decline in Treasury prices comes a day ahead of the February jobs report that is expected to show that the US economy tacked on 200,000 jobs last month, with the year-on-year pace of wage growth jumping to 2.7 per cent from 2.5 per cent.

A strong reading on the labour market would support Wall Street expectations the Federal Reserve will raise rates for the third time since the end of the financial crisis when poliymakers meet next week.

The 10-year yield recently rose by as much as 4.56 basis points to 2.605 per cent, according to Bloomberg data. It had struck 2.639 per cent in mid-December, which was the highest level since 2014.

At the shorter end of the curve, the two-year Treasury yield ticked up to 1.375 per cent, its highest mark since 2009.

Also on the subject of US debt, Treasury secretary Steven Mnuchin issued a letter to Congress indicating that the government will begin undertaking “extraordinary measures” to prevent the government from defaulting when the debt ceiling suspension expires on March 15.

Such actions are common when the US runs-up on its borrowing limit, but it serves as a reminder to investors that a Congressional fight over the debt ceiling may loom just as legislators are haggling over the future of the Affordable Care Act.

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