Treasury Yields Rise as Bond-market Looks to Find Footing

U.S. Treasury yields climbed on Tuesday as bond and equity markets struggled for stability amid continued questions whether the U.S. government would deploy aggressive fiscal stimulus policies to cushion the anticipated economic blow from the COVID-19 outbreak.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.793% picked up 7.7 basis points to 0.799%, while the 2-year note rate TMUBMUSD02Y, 0.372% fell 1.9 basis points to 0.341%. The 30-year bond yield TMUBMUSD30Y, 1.373% rose 5.9 basis points to 1.378%. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

After a volatile few weeks, bond-market traders were looking to find some semblance of stability on Tuesday, with U.S. equity futures pointing to a slightly higher start after hitting their upper limit in overnight trading.

Investors also still remain on the lookout for federal stimulus measures to offset the economic damage expected in the second-quarter of this year. The Federal Reserve’s rate cuts, bond purchases and other measures have looked to prop up bank lending and support market functioning, but analysts insist only government spending could help offset the demand shortfall that will result from the coronavirus.

See: Global recession is expected this year: S&P Global

In U.S. economic data, retail sales fell 0.5% in February in a sign of early damage from coronavirus epidemic.

Feburary Industrial production, and the Labor Department’s Job Openings and Labor Turnover Survey for January are also due Tuesday, along with the NAHB Homebuilders’ index and business inventories are also due for release.

But as the coronavirus impact is most likely to show up in the months ahead, investors said few will pay attention to any signs of the U.S. economy’s strength before the outbreak.

What did market participants’ say?

“After yesterday’s equity market selloff, markets are trying to stabilize this morning with rates on the move higher and steeper,” wrote Gregory Faranello, head of U.S. rates at AmeriVet Securities.