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U.S. Treasury yields for long-dated debt slid lower Tuesday, despite a stream of robust economic data, as Federal Reserve policy makers gathered in Washington for a two-day meeting.
What yields are doing
-
The 10-year Treasury note yield
TMUBMUSD10Y,
1.244%
dropped roughly 4 basis points to 1.243%, versus 1.276% on Monday at 3 p.m. Eastern Time. -
The 30-year Treasury bond
TMUBMUSD30Y,
1.901%
was down 2.3 basis points at 1.902%, compared with 1.925%. -
The 2-year note yield
TMUBMUSD02Y,
0.218%
rose less than 1 basis point to 0.207%, versus 0.198% a day ago.
Fixed-income drivers
A slump in trading in Asian markets overnight helped fuel some Treasury buying earlier on Tuesday, nudging long-term yields lower. Yields remained lower on the day, however, even after a steady stream of data showed U.S. consumer confidence, housing prices, and orders for long-lasting products all climbing.
READ: How China’s stock-market meltdown puts U.S. investors at risk
Durable-goods orders rose in June despite supply and labor shortages, and U.S. home prices set another record in May, according to the latest edition of the S&P CoreLogic Case-Shiller Home Price Index. Moveover, consumer confidence rose to a 16-month high in July, despite concerns about the delta strain of coronavirus, and manufacturing activity across the U.S.’s central Atlantic region gained further steam this month, according to data from the Federal Reserve Bank of Richmond.
Investors remain focused on the outcome of the meeting of the rate-setting Federal Open Market Committee that concludes at 2 p.m. Eastern on Wednesday, which will likely test Treasury yields which have been hanging around four-month month lows amid questions about inflation and the growth outlook for the U.S. in the aftermath of the COVID-19 crisis.
Investors are also watching for a $61 billion auction of five-year Treasury notes
TMUBMUSD05Y,
What strategists are saying
“US rates declined overnight with weaker global equities as the primary driver while investors await tomorrow’s FOMC statement and Powell’s press conference,” wrote BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.
“The process of recalibrating estimates for the path out of the pandemic remains the unifying theme across financial markets at the moment,” the fixed-income strategists wrote.
Craig Erlam, a senior market analyst, at OANDA Europe, said in a note that “we’re continuing to see caution in the markets on Tuesday as investors prepare for an intense 48 hours, with big tech reporting and the Fed meeting.”
