Treasury yields were back under pressure Tuesday as renewed weakness in equities stirred safe-haven demand for government debt.
What yields are doing
The yield on the 10-year Treasury note
fell to 2.815% versus 2.857% at 3 p.m. Eastern on Monday. Yields and debt prices move opposite each other.
The 2-year Treasury-note yield
was 2.583%, down from 2.622% Monday afternoon.
The yield on the 30-year Treasury bond
pulled back to 3.03% from 3.065% late Monday.
What’s driving the market
Treasury yields have seen back-to-back weekly declines after a run-up that took the 10-year above 3% to its highest level in around 3 1/2 years earlier this month. Analysts have attributed renewed demand for Treasurys to demand for safe-haven assets fueled by a stock-market selloff that’s seen the large-cap benchmark S&P 500
tumble toward a bear market.
Investors remain focused on inflation and the Federal Reserve’s response. The central bank, which is set to begin unwinding its balance sheet on June 1, delivered a half-point rate increase earlier this month following a more traditional quarter-point, or 25 basis point, rise earlier this year. Fed officials have signaled at least two more half-point rises are in store.
May U.S. purchasing managers index readings for manufacturing and services are due at 9:45 a.m. Eastern on Wednesday, with April new home sales set for release at 10 a.m.
Minutes of the Fed’s May 3-4 meeting are scheduled for Wednesday afternoon. The Fed’s preferred inflation indicator — the core personal consumptions expenditure index — will come out Friday morning.
What analysts say
Global sentiment “will remain an important driver for trading. Equity futures suggest that yesterday’s equity rebound still might turn into a new sell-on upticks move,” wrote analysts at KBC Bank in Brussels in a Tuesday note. “This might cap a further rise in core yields, confirming recent consolidation pattern on [eurozone and U.S.] interest-rate markets.”