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U.S. Treasury yields edged higher on Friday, bouncing off their lows as equity investors took comfort in signs of growing confidence among businesses in the U.S. and eurozone.
What are Treasurys doing?
The 10-year Treasury note yield
BX:TMUBMUSD10Y
rose 1.2 basis points to 1.566%, trimming its weekly decline to 0.5 basis point. The 2-year note rate
BX:TMUBMUSD02Y
was up 0.6 basis point to 0.157%, but leaving it down 0.6 basis point for the week, while the 30-year bond yield
BX:TMUBMUSD30Y
was up 1.1 basis points to 2.251%, paring its weekly drop to 0.9 basis point.
What’s driving Treasurys?
In the U.S., the flash reading of the IHS Market US. composite purchasing managers index rose to a record high 62.2 in April from 59.7 in March. New U.S. home sales ran at a seasonally adjusted annual 1.02 million rate in March, up over 20% from the previous month, the Commerce Department said.
The positive economic data bolstered equities, weighing on demand for haven assets and pushing Treasury yields slightly higher.
In Europe, the flash reading of the IHS Markit eurozone composite purchasing managers index rose to a nine-month high of 53.7 in April from 53.2 in March. Any number above 50 represents an expansion in economic activity.
This comes as the growing pace of vaccinations in Germany and France were bolstering hopes that the eurozone, a laggard in the global economic recovery, could start reopening its economy.
Such budding expectations have weighed on the values of eurozone government debt, narrowing the gap between U.S. and German debt yields.
See: Gap between German bond yields and U.S. Treasuries narrows as EU vaccine rollout speeds up
What did market participants say?
“The moves today and yesterday suggest the correlation between stocks and bond yields have became much more positive,” said Steve Feiss, managing director of fixed income at Etico Partners, in an interview.
