This post was originally published on this site
U.S. Treasury yields struggled for direction Friday, but remained on pace to cap a weekly slide, ahead of several updates on consumers financial health.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.661% edged 0.3 basis point lower to 0.671%. The 2-year note rate TMUBMUSD02Y, 0.175% fell 0.6 basis point to 0.178%, while the 30-year bond yield TMUBMUSD30Y, 1.403% was down 0.4 basis point to 1.413%. All three maturities stand around their two-week low.
What’s driving Treasurys?
Safe haven inflows into the bond-market helped to pin Treasury yields to the bottom end of their recent trading range. The market grappling with a second day of record rises in new U.S. COVID-19 cases concentrated across in southern and western states, with some governors halting business reopening plans.
So far, risk assets have mostly shrugged off those concerns thanks to the unprecedented level of support for the economy from fiscal and monetary policymakers.
See: Here’s why stock-market distress over spiking coronavirus cases is intensifying
In U.S. economic data, investors will see personal income, consumer spending and inflation numbers for May amid hopes that household spending will support the U.S. economic rebound. And the University of Michigan’s consumer sentiment index for June is due at 10 a.m. ET.
But analysts say the official data releases are backward-looking, and many investors are looking more closely at real-time datasets tracking, for example, visits to retail and restaurants, to gauge if the re-acceleration of COVID-19 cases will weigh on economic activity.
The Federal Reserve’s balance sheet declined by $12.4 billion to $7.08 trillion as of June. 24, compared with the week prior. While the central bank’s holdings of government bonds and mortgage-backed debt increased by more than $52.8 billion over that period, the growth was offset by a sharp drop in usage of the Fed’s dollar liquidity swaps.
Read: Why one strategist is actually encouraged by a spike in new U.S. coronavirus cases
What did market participants’ say?
“Case counts and closures will once again be the primary drivers of price action in the Treasury market as the weekend approaches. It’s not an especially compelling trading environment, but nonetheless the one facing investors as the fallout from the pandemic continues to present the most relevant uncertainty for the balance of the year,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.
