Yields for U.S. government debt were mostly ticking up Tuesday morning, with investors watching for a report on consumer confidence and house prices due later in the morning.

Debt markets have seen moves that analysts said have been partly fueled by normal positioning at the end of the month and second quarter.

How Treasurys are performing
  • The 10-year Treasury note
    TMUBMUSD10Y,
    1.489%

    was yielding 1.481%, compared with 1.478% at 3 p.m. Eastern Time on Monday. Yields for debt rise as prices fall.

  • The 30-year Treasury bond rate
    TMUBMUSD30Y,
    2.104%

    was at 2.095%, versus 2.098% a day ago.

  • The 2-year Treasury note
    TMUBMUSD02Y,
    0.262%

    was at 0.258%, compared with 0.254%.

Fixed-income drivers

Debt markets are seeing some choppy trading with month-end and quarter-end buying but moves for the 10-year Treaasury yield, for example, continue to be limited, trading within range of around 1.4% and 1.5% in recent sessions.

On the economic front, investors will be watching for a reading of house prices for April, the Case-Shiller House Price Index at 9 a.m. and a consumer confidence report at 10 a.m. from the Conference Board.

What strategists are saying

“After the global shock hit the world economy in 2020, we are in the midst of a global rebound which is spreading steadily amongst developed markets to slowly reach some emerging markets,” wrote Sebastien Galy, senior macrostrategist at Nordea.

“The fight against Covid-19 is far from over, but optimism abounds so much that the global economy is temporarily overheating as a consequence. Supply chains are overloaded, commodity prices have increased sharply and wage expectations have risen, at least in the United States. The question is whether this inflation is transitory or more permanent,” he wrote.

“We are of the view that it is partially transitory, though we expect wage pressures to stay elevated on the back of pent-up demand. This suggests a preference for low duration solutions and cyclical/value stocks,” the Nordea analyst said.



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