The 30-year Treasury yield rose 14 basis points; the 2-year rose 2

The 30-year Treasury yield rose 14 basis points, to 5.63%, in the week ending Friday, October 2. The 2-year rose 2 basis points, to 4.83%.

The 10-year yield rose 11 basis points, to 5.28%. A basis point is a hundredth of a percentage point, and the gap between the 10-year and the 2-year widened by 9 basis points, to 45.

The quarter is the larger climb. The 10-year yield stood at 5.29% on Wednesday, September 30, up 85 basis points from 4.44% on Tuesday, June 30. Friday's close sat 1 basis point under that quarter-end level.

The Federal Reserve had raised its target range on Wednesday, September 16, by a quarter of a percentage point, to 3.75% to 4%, in a 12 to 0 vote. It said inflation remains elevated. The middle of officials' projections, released that day, was 4.1% for the policy rate at the end of 2026. The 2-year yield is still above the new range and above that projection.

On Thursday, October 1, Dallas Fed President Lorie Logan said long-term yields had risen significantly in recent weeks. Market contacts told her the climb began with expectations for strong growth and a higher neutral rate, the policy rate meant to keep inflation and employment in balance.

Some models, she said, also point to a higher term premium, the extra yield for holding a long bond rather than rolling short ones. Higher term premiums, in her words, "can slow the economy, reducing the need to tighten monetary policy."

She said she estimates the target range needs to rise an additional 50 basis points or more, and called September's quarter-point increase an important first step.

Federal Reserve Vice Chair Philip Jefferson, speaking the same day, said yields had risen further since that meeting, a sign that investors were reassessing the outlook, and that he and his colleagues would "need to come to our own judgment, which may take more time."

Friday morning the Bureau of Labor Statistics said employers added 29,000 jobs in September. Economists had expected 90,000. Unemployment was 4.2%, and July and August payrolls were revised down by a combined 60,000.

Yields fell after the 8:30 a.m. release. The International Monetary Fund said that drop eased pressure for another rate increase in October. By the Treasury's 3:30 p.m. reading, the 2-year was 5 basis points higher on the day and the 10-year was 4 basis points higher. The 2-year rose more on Friday than it did over the full week.

What the funds did

The week's curve shows up in the funds that hold these bonds. The returns run from the close on Friday, September 25 to the close on Friday, October 2, and they put back the monthly payout that left the share price on Thursday.

A 14 basis point rise in the 30-year yield moves a fund of bonds that run for decades by more than a 2 basis point rise moves a fund of bonds due in a year or two.

The extra yield high-yield company bonds pay over Treasuries widened by 31 basis points, from 2.93% on Friday, September 25 to 3.24% on Thursday, October 1, the latest reading. The return on AUSHY in the table runs through Friday. Our read is that rates and credit both moved against these bonds in the same week.

For a holder of BTLT, the result followed the 30-year yield, because the bonds in that fund run for more than 20 years.