He Treasury bond yield of USA rose on Tuesday in a volatile market, as investors digested a series of mixed data that reinforces uncertainty around the pace and timing of the U.S. rate-easing cycle. Federal Reserve (Fed), which will probably start this year.
The bond market also faces massive bidding on Tuesday with the auction of $69 billion in two-year and $70 billion in five-year notes.
Returns initially fell after a government report showed that asset growth housing prices in USA slowed sharply in March, likely because rising mortgage rates pressured consumer demand.
However, longer-term debt yields rose while short-term bond yields trimmed losses after a report on consumer confidence showed an unexpected improvement in May, after worsening for three consecutive months.
“Since the last jobs report in the first week of May, the 10-year rate and the yield curve have moved in a narrow range. The 10-year has gone from 4.3% to 4.5%. The The market is looking for data that shows that the economy or inflation are slowing down,” said Stan Shipley of Evercore ISI In New York. “Right now, there are no clear signs of that. So we are in a wait-and-see situation: either the economy or inflation slows down further, or we are here with 3% growth and 3% inflation “he added.
The yield of the benchmark 10-year bonds gained 2 basis points (bp), at 4.49%; that of 30-year notes rose 3.5 bp, to 4.612%; that of the two-year debt, which reflects expectations of rate increases, fell 2 bp, to 4.933%; and that of five-year papers operated stable at 4.531%.
The yield curve between two- and 10-year bonds, which has historically predicted eight of the last nine recessions, was trading at -44.2 bp, up from -48.3 bp on Friday. On Friday, the curve hit its most inverted level since March 12, following stronger-than-expected data in USA.
Source: Ambito
