Treasurys score fifth straight month of gains, the longest such streak in years

U.S. government debt finished September with a fifth straight month of gains, putting in its best performance in up to 14 years, even after an extended selloff on Monday when Federal Reserve Chairman Jerome Powell implied officials are in no hurry to further cut interest rates.

What happened

The yield on the 2-year Treasury BX:TMUBMUSD02Y rose 8.6 basis points to 3.648%, from 3.562% on Friday. Over the third quarter, it fell 1.07 percentage points, the largest quarterly decline since March 2020, based on 3 p.m. Eastern time figures from Dow Jones Market Data. The yield on the 10-year Treasury BX:TMUBMUSD10Y rose 4.8 basis points to 3.798%, from around 3.750% on Friday. The yield on the 30-year Treasury BX:TMUBMUSD30Y rose 3.2 basis points to 4.131%, from 4.099% on Friday.For September, 2-, 10- and 30-year yields each finished lower for a fifth straight month. That is the longest streak of monthly declines for the 2-year yield since July 2020. And that matches the longest streak of monthly declines for the 10- and 30-year yields since August 2010 and May 2014, respectively.For the quarter, 10- and 30-year yields respectively dropped 54.4 basis points and 37.1 basis points. Those are the largest quarterly declines since December 2023.

What drove markets

On Monday, Federal Reserve Chair Jerome Powell said the U.S. economy is in solid shape and that officials intend to keep it that way. He also indicated that interest rates will move "over time toward a more neutral stance" if the economy evolves as expected. His remarks - which came more than a week after the central bank slashed interest rates by a half of a percentage point to a range of between 4.75% and 5% - helped fuel an extended selloff of U.S. government debt on Monday that left yields higher for the day. Yields finished lower for the month and the third quarter, however, as traders grappled with the possible need for further Fed rate cuts, the prospect of more easing inflation, and the risk of a softening labor market. Key economic data set to be released later this week includes the September nonfarm payrolls report on Friday. Outside the U.S., the risk grew of a widening Middle East conflict that could potentially threaten crude supplies, though oil futures ended lower and posted declines for the month and quarter.

-Vivien Lou Chen

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09-30-24 1614ET

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