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U.S. Treasury yields were mostly steady in early Tuesday trade as investors awaited more clarity from the Federal Reserve on last week’s bond-market selloff.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.435% was flat at 1.445%, while the 2-year note rate TMUBMUSD02Y, 0.128% was up 0.6 basis point to 0.129%. The 30-year bond yield TMUBMUSD30Y, 2.219% added 0.9 basis point to 2.230%.
What’s driving Treasurys?
Bond buyers continue to hope for more explicit pushback from the U.S. central bank on higher yields in government debt markets, but so far, senior Fed officials have stated the rise in Treasury yields are still in line with the improving economic prospects of the U.S. economy.
Fed Gov. Lael Brainard and San Francisco Fed President Mary Daly are due to speak on Tuesday.
With no U.S. economic data due on Tuesday, investors are likely to sit on the sidelines until the official employment Labor Department report on Friday which is expected to show the U.S. economy adding 218,000 jobs.
The Institute for Supply Management’s U.S. manufacturing report for February on Monday showed factory activity was picking up pace, but it also noted inflation pressures were building up as businesses grappled with pandemic-related supply constraints.
Meanwhile, concerns about bubbles and overvalued parts of global equities markets were a source of concern for Chinese regulators. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank said at a briefing in Beijing warned that stock values were disconnected with economic fundamentals in the U.S. and Europe, Bloomberg News reported and Reuters.
The Italian government may seek approval for further stimulus spending soon, sources told Bloomberg News.
The 10-year Italian government bond yield TMBMKIT-10Y, 0.707% rose 3.9 basis points to 0.706% on the report.
What did market participants say?
“The Fed is still in control (somewhat). But as was anticipated, with the continued recovery in the US economy, the dialogue is shifting quickly. And the rate market is simply not waiting for the Fed to give the nod on what is sees as a very strong pocket of economic growth to come, with a likely risk of inflationary pressures in tow,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.
