TREASURIES-U.S. yields extend gains as inflation data enters focus

HONG KONG, April 11 – U.S. Treasury yields marched higher on Monday, with five-, 10- and 30-year yields all setting multi-year highs as traders positioned themselves for higher inflation and an increasingly hawkish Federal Reserve policy outlook.

U.S. consumer price index data for March is due on Tuesday, with traders expecting further rises due to the impact of the war in Ukraine on energy costs and following the fastest annual inflation in 40 years in February. nL2N2VC2QK

The data is “set up to be the prism through which to gauge U.S. inflation risks,” analysts at Mizuho said, noting markets and the Fed were “only likely to see red from existing inflation pressures or pipeline price shocks.”

The yield on benchmark 10-year notes US10YT=RR rose as high as 2.7840% in Asian hours on Monday, its loftiest since January 2019. It has risen 44 basis points so far this month.

The yield on the 30-year Treasury bond US30YT=RR reached 2.782%, its highest since May 2019, while the five-year yield US5YT=RR rose to 2.839%, its highest since November 2018.

Moves at the shorter end of the curve were more muted and the closely watched spread between the two- and 10-year yields, which inverted last week, was positive again on Monday at around 19 basis points, according to tradeweb data. US2US10=TWEB

The gains meant U.S. 10-year yields rose above their Chinese counterparts CN10YT=RR for the first time in 12 years on Monday, also caused by a softening in Chinese yields in recent weeks. nL2N2W904L

Elsewhere, South Korea’s benchmark 10-year treasury bond yield KR10YT=RR rose to its highest in nearly eight years on Monday, in part mirroring rising U.S. yields. .KS

(Reporting by Alun John; Editing by Sam Holmes)

((alun.john@thomsonreuters.com))