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U.S. Treasury yields rose slightly on Friday to follow European bond yields higher after investors found signs of optimism in the eurozone economy inside a recent round of purchasing manager surveys.
What’s driving Treasurys?
The 10-year Treasury note yield TMUBMUSD10Y, +0.25% was up 0.4 basis point to 1.743%, while the 2-year note rate TMUBMUSD02Y, +0.51% edged 0.8 basis points higher to 1.526%, a day after touching its more than three-month closing low. The 30-year bond yield TMUBMUSD30Y, -0.13% rose around a single basis point to 2.191%.
The German 10-year government bond yield TMBMKDE-10Y, +2.40% was up 1.2 basis point to negative 0.333%.
What are Treasurys doing?
Investors continued to monitor the coronavirus’s rapid progress in China and across the globe, amid fears that it could dent the global economy’s momentum. Some of those concerns were ameliorated after the World Health Organization announced that the virus was not a global health emergency.
But economists cautioned that if the virus is not contained in the next few months, it could chip a few points off China’s growth rates at a time when its overall share of the world economy was second only to the U.S.
In economic data, the composite measure of the eurozone purchasing manager indices for January came in at 50.9, virtually unchanged from the previous month’s reading. But analysts noted that the manufacturing PMI had increased to 47.5 from 46.1, an indication that confidence among factory-owners was improving in the wake of the phase one trade-deal signing. Any number above 50 represents an expansion in economic activity, and below 50
The U.S. will also see its own flash readings from purchasing manager surveys later at 9:45 a.m. ET.
What did market participants’ say?
“With manufacturing showing early signs of recovery and the service sector continuing to grow, chances of a recession are receding further. We are expecting [eurozone] growth to very gradually pick up over the course of the year,” wrote Bert Colijn, senior economist for the eurozone.
