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U.S. Treasury yields rose Monday as Chinese bullish sentiment spilled over into global equity markets, weighing on appetite for safe-haven assets.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.702% rose 1.8 basis points to 0.689%, while the 2-year note rate TMUBMUSD02Y, 0.160% edged 0.6 basis point higher to 0.161%. The 30-year bond yield TMUBMUSD30Y, 1.469% rose 1.9 basis points to 1.452%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Chinese equities gained sharply after the country’s state media ran editorials and articles encouraging investors to buy stocks to support domestic markets. The CSI 300 index 000300, +5.66%, China’s benchmark equity gauge composed of stocks listed in Shanghai and Shenzhen’s exchanges, gained 5.7%, driving it up 13.8% year-to-date.
U.S. and European stocks joined in the bullish trading, with futures for the S&P 500 SPX, +0.45% and Dow Jones Industrial Average DJIA, +0.35% signaling gains at the start of Monday’s trade.
Still, investors are still contending with the climbing tally of new COVID-19 cases in the U.S., concentrated in a few hot-spot states including Arizona and Florida. The worry is fears of the virus could hamper consumer and business spending in the next few months, after business activity rebounded sharply in the second-quarter of this year due to aggressive efforts to reopen the economy.
In economic data, Markit will release its June services sector purchasing managers index at 9:45 a.m. Eastern Time, followed by the more closely followed report from Institute of Supply Management’s on services at 10 a.m.
What did market participants’ say?
“Despite the continued rise in cases, though, it’s risk-on as we begin the second half led by China and Asian stocks. U.S. futures are pointing to a strong open with rates modestly higher,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.
