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Treasury Yields Rise After Stronger-than-Expected Consumer Sentiment

Treasury yields climbed on Tuesday following a rally for fixed income assets amid intensifying concerns over the Chinese coronavirus.


US 3-MO U.S. 3 Month Treasury 0.114 0.005 0.00
US 1-YR U.S. 1 Year Treasury 0.17 -0.003 0.00
US 2-YR U.S. 2 Year Treasury 0.22 0.001 0.00
US 5-YR U.S. 5 Year Treasury 0.377 0.008 0.00
US 10-YR U.S. 10 Year Treasury 0.618 0.007 0.00
US 30-YR U.S. 30 Year Treasury 1.204 0.001 0.00

The yield on the benchmark10-year Treasury note, which moves inversely to price, rose about four basis points to around 1.646%, while the yield on the 30-year Treasury bond was also higher at around 2.098%.

Rates climbed higher after data showed consumer confidence in the U.S.grew more than expected in January. The Conference Board’s consumer confidence index rose to 131.6 this month from 126.5 in December. Economists polled by Dow Jones expected consumer confidence to rise to 128.

However, earlier in the session, the three-month Treasury bill briefly inverted with the 10-Treasury note for the first time since October Tuesday morning.

“We don’t think the move in rates and the yield curve is reflective of the U.S. economy going into recession,” Gregory Faranello, head of U.S. rates at AmeriVet Securities. “We just think it’s reflective of the fact that now the market is nervous off the back of the coronavirus.”

Treasury yields had fallen in the past week on increased coronavirus fears as Chinese authorities confirmed that there were now more than 4,500 confirmed cases of coronavirus, with 106 deaths.

Multiple cases of the deadly pneumonia-like virus have been confirmed in Thailand, Vietnam, South Korea, Malaysia, Japan, Australia, France and the United States. Germany, Cambodia and Sri Lanka all reportedly confirmed their first cases of the virus on Monday.

The rapid outbreak of the coronavirus spooked financial markets in the previous session, with stock markets around the world sharply lower.

Fed meeting, auctions

Investors are likely to closely monitor the Federal Reserve’s first meeting of the year on Tuesday, with the U.S. central bank’s two-day meeting widely expected to keep interest rates unchanged.

The Federal Open Market Committee (FOMC) held the target range for the federal funds rate at 1.5-1.75% in December, following three consecutive rate cuts.

The U.S. Treasury is set to auction $26 billion in 52-week bills, $32 billion in seven-year notes and $20 billion in two-year floating-rate notes (FRNs).

CNBC’s Fred Imbert contributed reporting.

By: Yun Li and Sam Meredith