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U.S. Treasury yields ticked higher on Tuesday as global equities rallied on expectations for policymakers to launch fiscal stimulus measures to cushion the economic downturn driven by the COVID-19 pandemic.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, +8.87% rose 4.1 basis points to 0.807%, while the 2-year note rate TMUBMUSD02Y, +7.23% was up 2.1 basis points to 0.315%. The 30-year bond yield TMUBMUSD30Y, +5.72% climbed 4.8 basis points to 1.394%. Bond prices move inversely to yields.
What’s driving Treasurys?
The bond-market is focused on the rapid dissemination of the coronavirus across the U.S. as more states and cities across the country lock down to prevent the virus’ spread.
In particular, investors are eagerly awaiting the details of a $2 billion fiscal stimulus package debated in Congress, which could give welcome relief to battered U.S. industries and unemployed workers.
Futures for the S&P 500 SPX, -2.93% and the Dow Jones Industrial Average DJIA, -3.04% pointed to a sharply higher open for U.S. equities.
The buoyant sentiment in equities on Tuesday suggested investors had mostly expected data showing that industrial activity was slowing sharply across the world. The Markit flash eurozone composite purchasing managers index in March plunged to a reading of 31.4 from 51.6 in February, which is a record low since the series began in July 1998. Any reading below 50 represents a contraction in economic activity.
Traders are also waiting for the Markit’s March purchasing managers survey for the U.S. at 9:45 a.m. ET. The survey could offer an extent of the pain seen across the U.S. economy as factories curtail production, retailers close up shop, and workers stay home.
In other data, new home sales for February will come at 10 a.m. MarketWatch-polled analysts anticipate sales to run at annualized pace of 750,000.
The U.S. Treasury Department will auction off $40 billion of 2-year notes, the first of three sales for coupon-bearing government paper this week.
What did market participants’ say?
“Although a great deal has moved in the last two weeks in virus containment efforts and economic aid, markets are still flying blind when it comes to pricing the nature and timing of the eventual recovery,” said Jim Vogel, an interest-rate strategist at FHN Financial, in a note.
