May 14 2013 - Rate Brief

After tumbling more than 45 bps from their March 8th highs, longer dated Treasury yields have jumped over the past two weeks. The benchmark 10-yr yield has run back above the 1.900% threshold, retracing 61.8% of the mid-March to early-May move. The run up in yields managed to break 1.850%, and close the gap that developed in late-April. Treasury bulls will now look to take control, and push the key yield back below the 1.850% level.

The advance in Treasury yields has been accompanied by a jump in high yield. On May 6, the BofA Merrill Lynch US High Yield Master II Index's yield slipped below the 5.00% threshold for the first time ever, ticking to 4.99%. However, its stay below that mark was short lived as the yield has surged to 5.16% in just a couple of days. The Index's yield has not been above 6.00% since the trading day of 2012, when it registered a 6.11% reading.

Meanwhile, the yield on the BofA Merrill Lynch U.S. Corporates (7-10Y) AAA Index has climbed back up to 2.43%, touching its highest level in a month. This represents a 55 bp advance from the record low 1.88% that was reached in December. The yield has not seen a print above 3.00% since December 2011.