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U.S. Treasury yields inched lower on Friday as investors watched the European Union summit where its leaders will discuss the size and details of a bailout program for the economic bloc.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.604% was down 0.7 basis point to 0.605%, close to the key 0.60% floor for recent trading in the bond-market. The 2-year note TMUBMUSD02Y, 0.141% stood at 0.145%, while the 30-year bond yield TMUBMUSD30Y, 1.297% fell 0.5 basis point to 1.296%.
What’s driving Treasurys?
German Chancellor Angela Merkel said there remained significant differences between European leaders over a bailout package and budget for the European Union, amid hopes by market participants that the EU would employ more fiscal stimulus measures to support their coronavirus-battered economies.
European bond yields were largely unchanged. The 10-year German government bond rate TMBMKDE-10Y, -0.472% traded at negative 0.51%, while its Italian counterpart TMBMKIT-10Y, 1.180% was at 1.18%.
See: European Union leaders say they are far apart on COVID-19 bailout deal
Meanwhile, the U.S. reported a record of more than 70,000 new COVID-19 cases in a single day, the highest reported by any country since the start of the outbreak.
In U.S. economic data, housing starts for June were up 17% at an annualized pace of 1.186 million, MarketWatch-surveyed analysts had forecast a reading of 1.20 million. Building permits came in a pace of 1.24 million. The University of Michigan’s consumer sentiment gauge for July is due at 10 a.m. ET.
What did market participants’ say?
“As often with EU policy, the devil will be in the detail. There is no certainty at this stage about the amount, allocation key, nature (grants or loans), conditionality, or timing of the disbursements. It may well be that the eventual outcome is all but a trickle of money reaching large peripheral countries over a 7-year period,” said Padhraic Garvey, regional head of research for the Americas at ING.
