Bond Report: 10-year Treasury yield holds steady at 2.8% as stock-market selloff relents


Treasurys were under renewed pressure Monday, pushing the 10-year yield above 2.8%, as a selloff in equities let up and worries about inflation and recession remained.

What yields are doing
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 2.818% was at 2.814%, compared with 2.785% at 3 p.m. Eastern on Friday. Yields and debt prices move opposite each other.
  • The 2-year Treasury yield TMUBMUSD02Y, 2.599% stood at 2.6% versus 2.581% Friday afternoon.
  • The 30-year Treasury bond TMUBMUSD30Y, 3.017% yielded 3.013%, up from 2.994% late Friday.
What’s driving the market

Major U.S. stock indexes opened higher on Monday, with some analysts crediting remarks by President Joe Biden, who said China tariffs imposed during the Trump administration were under consideration and would be discussed with Treasury Secretary Janet Yellen upon his return to the U.S.

Biden also said the U.S. would respond militarily to defend Taiwan from aggression by China, appearing to break with the long-held U.S. policy of strategic ambiguity.

Dow industrials DJIA, +0.82% were up by more than 300 points after the open, while the S&P 500 index SPX, +0.40% was up 0.9% and the Nasdaq was up 0.7%.

Yields have risen sharply in 2022 as investors fret about persistently high inflation and an aggressive response by the Federal Reserve, which delivered a half-point rate increase earlier this month —- its largest in more than 20 years. Chairman Jerome Powell has said half-point hikes are on the table for the Fed’s next two policy meetings.

Minutes of the Fed’s May policy meeting are due on Wednesday, while the Fed’s preferred measure of price pressures, the core personal consumption expenditure, or PCE, inflation reading for April is set for release on Friday.

Last week, yields had a second consecutive weekly fall as investors seeking safety jumped into Treasurys and a selloff took down stocks, with the S&P 500 SPX narrowly averting a fall into bear market territory on Friday after temporarily trading below the 20% pullback threshold.

Read: The S&P 500 narrowly averts a bear market. How long do they last once they arrive?

What analysts say

”A number of Fed and ECB (European Central Bank) members are scheduled to speak, but the fate for fixed-income markets seems to reside with the equity complex at the moment,” wrote economists at UniCredit Bank in a Monday note.

“The S&P 500 has registered losses for seven consecutive weeks —- something that has only happened three times in the past century. In two of those three instances, however, an eighth week of losses followed. Hence, if history is any guide, market sentiment is likely to remain strained, leaving government bonds supported overall,” they said.

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