Treasury yields rise as global stock markets start week on upbeat tone

“The underpinning of the corporate bond market, coupled with a continued reopening of the economy, is supporting equities short term,” said Gregory Faranello, head of U.S. rates, AmeriVet Securities.

U.S. Treasury yields rose Tuesday as global stock markets rallied at the start of the U.S. holiday-shortened week amid signs that more economies were on the path to lifting lockdown measures and restarting growth. 

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.699% rose 3 basis points to 1.158%, while the 2-year note rate TMUBMUSD02Y, 0.194% was up 1.6 basis points to 0.184%. The 30-year bond yield TMUBMUSD30Y, 1.433% climbed 3.2 basis points to 1.404%. Bond prices move in the opposite direction of yields. 

What’s driving Treasurys?

Japan lifted its state of emergency for Tokyo and other areas showing a high number of coronavirus cases, while news reports suggested Japan’s government was moving forward with an additional stimulus package worth 1 trillion yen ($931 billion). France and Spain also announced gradual moves to reopen their economies.

U.S. equity futures and global stocks were rallying on Tuesday. The S&P 500 SPX, 1.83% could open above the key psychological level of 3,000 at Tuesday’s opening bell. 

Investors will face some U.S. economic data Tuesday morning. The May reading of the Consumer Confidence Board’s consumer confidence index and April new home sales, along with the U.S. Case-Shiller home price index are likely to underline the U.S.’s growth woes in the second-quarter.

The Treasury will auction off $127 billion of short-term bonds over the course of the next three days, starting with a $44 billion sale of 2-year notes on Tuesday afternoon. The influx of new debt supply can weigh on bond-market trading, pushing yields higher.

What did market participants’ say?

“The underpinning of the corporate bond market, coupled with a continued reopening of the economy, is supporting equities short term,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities, in a note.

“The Treasury market is on the move lower this morning with the strong risk-off tone,” said Faranello.