Treasury prices rose Monday, pushing yields lower, after Asian stocks followed last Friday’s selloff in U.S. equity markets, amid lingering concerns that June’s nonfarm payrolls report would discourage the Federal Reserve from carrying out an aggressive easing path this year. European stocks and U.S. equities futures markets also traded in the red.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -0.39% was down 0.9 basis point to 2.035%, after staging its biggest daily climb in around seven months, while the 30-year bond TMUBMUSD30Y, -0.76% fell 1.6 basis points to 2.532%. The 2-year note rate TMUBMUSD02Y, +0.24% was mostly unchanged at 1.870%. Debt prices move in the opposite direction of yields.
What’s driving Treasurys?
Global equity markets continued to sell off in the wake of a stronger-than-expected jobs report, which showed the U.S. economy had created 224,000 new jobs. The surprising show of resilience led traders to wind down bets on two quarter-percentage-point rate cuts at July’s Fed meeting.
Asian equity indexes ended sharply lower, stoking demand for haven assets like U.S. government paper. The Shanghai Composite SHCOMP, -2.58% fell 2.6%, while Tokyo’s Nikkei NIK, -0.98% shed 0.9%. Futures for the Dow YMU19, -0.31% and the S&P ESU19, -0.37% showed U.S. stocks were poised to open lower.
Investors will get a handle on key inflation data later on Thursday, with analysts viewing the June consumer price report as one of the last key economic indicators the Fed will monitor before it heads into its meeting on July 31. The U.S. central bank is still expected to carry out a quarter-percentage- point rate cut this month.
What’s driving Treasurys?
“We are going to be looking at the core [consumer price index] data this week as a harbinger for cementing a ‘go/no-go’ move at the coming confab. If core CPI matches/exceeds our expectation for a 0.3% gain we will retain our call, otherwise we’ll likely move to the consensus in calling for a 25 [basis point] decline in rates later this month,” wrote Ian Pollick, head of U.S. rates strategy at CIBC.