U.S. 10-year Treasury yield climbs to January 2014 highs on signs of higher inflation, hopes of further rate hikes this year

The U.S. 10-year Treasury yield jumped to over 4-year high Monday as investors braced for a higher rate of inflation going forward and expectations of more rate hikes by the Federal Reserve this year. According to the latest March, monetary policy meeting minutes released earlier this month, "all participants" look forward to a solidifying economy amid increasing inflationary momentum over the coming months.

The yield on the benchmark 10-year Treasuries jumped nearly 3 basis points to 2.97 percent, the super-long 30-year bond yields surged close to 2-1/2 basis points to 3.16 percent and the yield on the short-term 2-year traded 1 basis point lower at 2.46 percent by 11:35GMT.

The advance PMI reports for April will be released today, together with existing home sales data for March. The S&P/CoreLogic home price index for February and new home sales data for March follow tomorrow, alongside the Conference Board’s consumer survey for April. On Thursday most interest will center on the advance durable goods orders report for March, with the advance trade and inventory reports for March also released that day.

Following those reports, analysts will be able to refine their estimates of Q1 GDP growth, the advance estimate of which is the highlight of Friday’s diary. At present Bloomberg’s survey indicates that the market expects growth to have slowed to 2.0 percent q/q annualized from 2.9 percent in Q4.

Also of significant interest on Friday will be the Employment Cost Index for Q1, while the final University of Michigan survey results for April round out the economic diary. In the bond market, the Treasury will auction 2-year notes on Tuesday, 2-year FRNs and 5-year notes on Wednesday, and 7-year notes on Thursday. It is also worth noting that over a third of the companies that make up the S&P500 are reporting their Q1 earnings this week. 

Meanwhile, the S&P 500 Futures remained tad higher at 2,672.00 by 11:40GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained slightly bullish at 87.20 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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