U.S. government bonds drew early selling on Tuesday, nudging yields higher, as global equity benchmarks took cues from a rally in Chinese stocks markets, underscoring waning appetite for assets perceived as havens, including bonds.
The 10-year Treasury note yield TMUBMUSD10Y, +0.28% rose 1.1 basis points to 2.947%, a day after marking its lowest yield since July 25 on Monday, according to Dow Jones Market Data, based on levels at 3 p.m. Eastern.
The 30-year bond yield TMUBMUSD30Y, +0.29% meanwhile, edged 0.9 basis point to 3.090%, also hitting its lowest rate since July 25 in the previous session. Both the 10-year and 30-year yields are looking to halt three straight sessions of declines.
The two-year note yield TMUBMUSD02Y, +0.46% inched up 0.4 basis point to reach 2.653%.
Bond prices fall as yields rise.
Modest selling in U.S. government paper comes as the Shanghai Composite Index SHCOMP, +2.74% gained 2.7%, more than offsetting Monday’s losses. Hong Kong’s Hang Seng HSI, +1.54% climbed for a second day in a row, increasing 1.5%, while Japan’s Nikkei advanced by about 0.7%, reflecting a broad rally in Asian markets.
Asian assets have been under pressure amid worries about an apparent escalation of trade tensions between the U.S. and China, which has supported some appetite for assets viewed as safe plays, including U.S. fixed-income securities and the U.S. dollar. Against that backdrop, China’s main stock benchmark, the Shanghai Composite, is down roughly 16% on the year and about 21% since its peak back in late January, according to FactSet data
Over the weekend, President Donald Trump tweeted that “tariffs are working big time.”
However moves in equities on Monday and so far Tuesday, with the Dow Jones Industrial Average DJIA, +0.16% and the S&P 500 index SPX, +0.35% on multisession rallies, suggest that investors are shaking off the recent bout of trade animosities.
“Treasury prices were in a tight range overnight as Asia equity markets rallied by 1% to 3% following yesterday’s move in the Dow,” said Tom di Galoma, managing director of government trading at Seaport Global Securities, in a Tuesday research note.
Looking ahead, market participants will await an offering of 3-year note TMUBMUSD03Y, +0.52% auction at 1 p.m. Eastern Time, followed by 10-year and 30-year auctions slated for Wednesday and Thursday, part of some $78 billion set to be sold over the next four trading sessions.
Auctions can influence trading in outstanding government bonds and offer clues about demand for fixed-income markets.
On the economic data front, a report on job openings in June is due at 10 a.m., followed by data on the state of consumer credit for June, set to be released at 3 p.m.
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