After a big rally that began in mid-March, amid the outbreak of the Cypriot financial crisis and fears over a slowdown in global growth, Treasuries have given up all of their gains, and bond yields are now rising to the highest levels in over a year.
This morning, the yield on the 10-year U.S. Treasury hit a high of 2.23%.
Naturally, there is a lot of debate over where yields go next. Goldman Sachs, one of the prominent shops calling for higher yields, has published a call saying the sell-off in Treasuries is "for real" this time.
Despite hitting a high of 2.23% earlier, yields have since backed down to 2.15%, and bonds are now positive on the day.
And amid the wild price action, we're seeing a massive amount of trading in the market.
Yesterday, trading volumes in the Treasury futures market on the Chicago Mercantile Exchange rose to an all-time high.
"CME Group's Treasury complex also experienced record volumes yesterday in the 10-Year U.S. Treasury Note futures (4,216,687), the 5-year U.S. Treasury Note futures and options (2,994,162), and the 2-Year U.S. Treasury Note futures and options (1,929,500)," said the CME in a release.
Today, with bonds slightly in the green, it looks like the market is on pace to break the record yet again.
Brean Capital Head of Rates Russ Certo passes along some trading volume information in the cash market as of 1:30 PM – $32 billion have traded in 2-year Treasuries, $80 billion in 5-years, $29 billion in 7-years, and $72 billion in 10-years.
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