U.S. Treasury yields rose Tuesday as global stock markets rallied at the start of the U.S. holiday-shortened week amid signs that more economies were on the path to lifting lockdown measures and restarting growth.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.693% rose 3.8 basis points to 0.697%, while the two-year note rate TMUBMUSD02Y, 0.179% was up a basis point to 0.178%. The 30-year bond yield TMUBMUSD30Y, 1.433% climbed 6.5 basis points to 1.438%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Japan lifted its state of emergency for Tokyo and other areas showing a high number of coronavirus cases, while news reports suggested Japan’s government was moving forward with an additional stimulus package worth 1 trillion yen ($931 billion). France and Spain also announced gradual moves to reopen their economies.
U.S. equities and global stock markets rallied on Tuesday. The S&P 500 SPX, +1.22% briefly traded above 3,000 at the start of trading, but ended slightly below the key psychological level.
Despite the buoyant tone, geopolitical tensions remained on the list of investors’ concerns. White House press secretary Kayleigh McEnany said President Donald Trump was displeased with China over its efforts to crack down on Hong Kong. U.S. officials have warned that China’s efforts to impose new national-security laws in the Asian financial hub could jeopardize Hong Kong’s special trade status.
Investors faced some U.S. economic data, as the May reading of the Consumer Confidence Board’s consumer confidence index inched higher to 86.6, up from 87.7. April new-home sales ran at an annualized pace of 623,000. Meanwhile, the U.S. Case-Shiller home price index rose 4.4% year-over-year.
The Treasury sold $44 billion of two-year notes on Tuesday, but the influx of debt supply didn’t influence bond yields amid strong demand. The proportion of bids accepted to bids received stood at 2.68 times, slightly above the ratio’s 12-month average.
What did market participants say?
“The economy continues to reopen around the globe. In the United States, stories are mixed in terms of adherence to social-distancing measures, which is to be expected.” said Gregory Faranello, head of U.S. rates at AmeriVet Securities, in a note.
“We continue to see the reopening as uneven, and at the same time any progress from here will be a welcomed sign,” said Faranello.