Bond Report: Treasury yields come off overnight lows as stocks aim for higher open on Wall Street

This post was originally published on this site

U.S. Treasury yields trimmed their overnight drop on Friday as a raft of stellar earnings from highflying technology companies bolstered investor sentiment, despite the economic hit to the global economy from the coronavirus.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.542% was down 0.6 basis point to 0.535%, after plumbing 0.521%, below its previous March low. The 2-year note rate TMUBMUSD02Y, 0.113% edged 0.8 basis point lower to 0.113%, while the 30-year bond yield TMUBMUSD30Y, 1.213% was at 1.196%.

What’s driving Treasurys?

Amazon, Facebook, Apple and Google reported stronger results than Wall Street had forecast, putting a stop to the overnight gains in government bonds. The stock market’s rise has been driven by the relentless climb in a handful of tech company shares, raising worries that the stock market is becoming detached from the broader malaise weighing on the U.S. and global economy due to the COVID-19 pandemic.

Futures for the S&P 500 SPX, -0.37% and Dow Jones Industrial Average DJIA, -0.85% were pointing to a modestly higher open on Tuesday.

As expected, investors saw some bruising eurozone economic data, with the 19-member currency bloc reporting its biggest contraction on record in the second-quarter, falling by 12%.

As for the U.S., consumer spending rose by 5.6% in June, marking its second straight monthly increase. Personal income also fell by 1.1% in June.

Read: ‘A massive welfare economy’ – huge federal aid prevents an even steeper GDP collapse

What’s driving Treasurys?

“In the end for us, the bigger concern right now is COVID and the economy. And in particular the job market. This is not to suggest these big tech names haven’t and won’t continue to impact equity indices. They will. We simply don’t feel the performance of these indices is a good reflection of the economic reality right now,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

Add Comment