Treasury yields rose Monday, after an earlier slide, with the two-year Treasury note hitting a 10-day high as U.S.-China trade tensions remained a focus for investors, driving Wall Street mostly away from stocks to the perceived safety of government paper over the past few weeks.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -0.03% rose 1.9 basis points to 2.416%. The benchmark yield slipped 5.9 basis points last week.
The two-year note yield TMUBMUSD02Y, -0.19% added 1.8 basis points at 2.223%, marking its highest yields since May 10, after a 4.7-basis-point decline last week, according to Dow Jones Market Data. The 30-year bond yield TMUBMUSD30Y, -0.03% added one basis point to 2.835%, following a weekly drop of 4.8 basis points Friday.
Debt prices move in the opposite direction of yields.
What’s driving Treasurys?
The likelihood of further trade talks between the U.S. and China appeared to diminish after CNBC reported that scheduling for the next round of negotiations is “in flux,” because neither side appears willing to agree to concessions.
Meanwhile, Bloomberg News reported Sunday that U.S. chip makers have frozen the supply of critical software and hardware components to Huawei Technologies Inc., heightening trade concerns.
The tariff tensions were weighing on global stocks, with the Dow Jones Industrial Average DJIA, -0.33% and the S&P 500 index SPX, -0.67% closing lower.
Meanwhile, President Donald Trump warned Iran that it will face destruction if it seeks a fight, while Iranian officials said their country isn’t looking for war, raising worries about geopolitical strife that could drive bond-buying.
Which data and Fed speakers are ahead?
The Chicago Fed’s index registered at a negative-0.45 in April, down from an upwardly revised positive-0.05 in March and a negative-0.31 in February.
Atlanta Fed President Raphael Bostic on Monday said he wasn’t sure what direction the next interest-rate move would be, because there are risks that go in both directions. He expects “solid growth” of 2.25%-2.5% this year but less than the 3% recorded last year.
What are strategists saying?
“The U.S./China trade war and possible conflict with Iran continue to play a major role in my view for lower rates as well. At some point this year, I believe 10-year yields could target 2.25% moving to 2.10% early next year,” said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
Di Galoma said “bargain-hunting in equities” was the source of a yield climb later in the session.
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