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U.S. Treasury yields trimmed their climb on Tuesday as economic data pointed to growing pessimism among consumers and households, historically the engine of U.S. growth.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.687% climbed 3.5 basis points to 0.680%, its biggest daily surge since August 13, while the 2-year note rate TMUBMUSD02Y, 0.177% was virtually flat at 0.153%. The 30-year bond yield TMUBMUSD30Y, 1.397% rose 3.7 basis points to 1.386%. Bond prices move inversely to yields.
What’s driving Treasurys?
An early selloff in the bond market on Tuesday lost some momentum after data showed consumers were becoming less optimistic over the U.S. recovery’s prospects. The Conference board’s index of consumer confidence stumbled to 84.8 this month, its lowest reading in the pandemic, from a revised 91.7 in July.
In other U.S. data, the S&P CoreLogic Case–Shiller U.S. National Home Price Index rose 4.3%. Meanwhile, new home sales jumped 14% to an annualized rate of 901,000 in July.
Top U.S. and Chinese officials reaffirmed their commitment to the Phase One trade deal, helping to soothe concerns that tensions between the two sides were intensifying. Easing geopolitical worries spurred gains in global stocks on Tuesday, with the S&P 500 SPX, +0.36% index closing at a record.
The U.S. Treasury Department kicked off the first of its $148 billion of debt auctions this week, selling $50 billion of 2-year notes Tuesday afternoon.
Anticipation of new debt issuance helped to weigh on trading for government bonds as part of the so-called concession process whereby broker-dealers will look to push yields higher and ensure a successful auction.
What did market participants’ say?
“Consumer confidence has now taken two steps back after one giant step forward in June. Although the economy continues to recover, initial hopes for a faster return to a pre-pandemic normal have faded,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors.
