This post was originally published on this site
Treasury yields fell early Monday trade as U.S. equity benchmarks were poised to extend their biggest weekly selloff since mid-March, buoying demand for haven assets.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.674% fell 3 basis points to 0.669%, following its biggest weekly drop since March, while the 2-year note rate TMUBMUSD02Y, 0.189% edged a basis point lower to 0.181%. The 30-year bond yield TMUBMUSD30Y, 1.416% slipped 3.9 basis points to 1.408%.
Bond yields fall as prices rise.
What’s driving Treasurys?
The bond-market has rallied amid worries that a spate of new coronavirus cases in Beijing pointed to how even countries that appeared to have controlled their own outbreaks could still see the disease’s resurgence. Local health officials say the outbreak occurred in a wholesale food market and may have come from salmon imports.
This helped to set a bearish tone for risk assets on early Monday. Futures for the S&P 500 SPX, +1.30% and Dow Jones Industrial Average DJIA, +1.90% point to a sharp drop for U.S. stocks at the start of trading.
And another batch of Chinese economic data underlined the difficulty of escaping the coronavirus-driven downturn. Industrial output rose 4.4% in May from a year ago, while retail sales fell by 2.8% last month. Both came in below economists’ expectations.
The U.S. is also grappling with its own concerns of a second wave of coronavirus infections, as some states report an uptick in cases and hospitalizations associated with the disease. Dallas Fed President Robert Kaplan said Sunday that public health procedures to combat the coronavirus were just as important as government funding for the nascent economic recovery and that, to date, the efforts to reduce coronavirus infections have been “uneven.”
There won’t be much economic data out on Monday, with only a May snapshot of manufacturing activity in New York state due at 8:30 a.m. ET.
What did market participants’ say?
“A reassessment both as regards the trajectory of a post-COVID economic recovery and the likelihood of successfully containing the contagion itself has weighed heavily on market sentiment overnight,” said analysts at Rabobank.
