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U.S. Treasury yields fell from their intraday high Monday as the stock-market rally staged a potent reversal, amid fresh concerns around how a rollback of reopening measures in some states could stall the U.S. economic recovery.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.619% rose 0.5 basis point to 0.638%, after climbing as high as 0.663% in the morning, while the 30-year bond yield TMUBMUSD30Y, 1.311% edged up 0.9 basis point to 1.335%. The 2-year note rate TMUBMUSD02Y, 0.129% rose 0.6 basis point to 0.159%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Treasury yields followed the equity market’s cue, as investors initially brushed off the rising tally of COVID-19 cases only to give into renewed pessimism around news centered on lockdown measures.
Houston officials called for a return to lockdown to slow the spread of the coronavirus as its hospitals neared capacity. And California Gov. Gavin Newsom ordered every county in the state to close indoor restaurants, movie theaters and bars effective Monday.
After getting off to an auspicious start on Monday, the Nasdaq Composite Index COMP, -2.13% and S&P 500 SPX, -0.93% ended sharply lower, fueling demand for government bonds.
Later this week, investors will face key economic data on retail sales, inflation and the housing market and investors will glean some information about the economic outlook as some of the nation’s biggest banks report quarterly results as early as Tuesday.
But analysts have mostly focused on the deterioration in higher frequency indicators tracking workers’ movements, spending and travel habits. Such indicators have showed a deterioration of economic activity in the past few weeks.
What did market participants say?
“The risks towards toward lower yields and flatter curves posed by COVID remain prominent,” said Benjamin Schroeder, senior rates strategist at ING.
