Aug 19, 2019

Bonds | U.S. Treasury Yield Report: US Treasury yields climb as recession fears ease

Thomas Franck

U.S. government debt yields climbed on Monday as a more positive market and economic outlook goaded investors back into riskier assets.
The yield on the benchmark 10-year Treasury note rose 6 basis points to 1.6% while the rate on Treasurys maturing in two years rose 5 basis points to 1.541%. The yield on the 30-year Treasury bond, which hit new all-time lows last week, was also higher at 2.083%.
The spread between the 2-year Treasury yield and that of the 10-year inverted in intraday trading on Wednesday for the first time in over a decade, a sign many consider a reliable recession indicator. That portion of the yield curve steepened on Monday and was last seen positive at 8 basis points.
Market focus is largely attuned to global central banks, as hopes of more stimulus from major economies such as China and Germany soothed investors’ concerns about a global economic downturn.
The Commerce Department was preparing to extend the length of a license that has allowed Huawei to continue business with the U.S. companies to service existing customers despite the White House’s concerns over national security, according to report from the Wall Street Journal and Reuters.
Huawei’s business in the U.S. is one of the most contentious points in the ongoing trade war with China.
On Saturday, China’s central bank unveiled a key interest rate reform to help drive borrowing costs lower for companies.
Meanwhile, market participants are likely to closely monitor the Federal Reserve’s Jackson Hole symposium this week in order to get greater clarity on the future path of interest rates. U.S. central bank officials cut interest rates in July and indicated at the time that they’d be open to future easing if warranted.
To be sure, investors see about a 74% chance of a quarter-point rate cut next month.
A spell of weaker-than-expected data, agitation in U.S.-China trade relations and elevated recession fears sent Treasury yields tumbling to multiyear lows last week. For his part, however, President Donald Trump said Sunday he doesn’t see a recession on the horizon in the U.S. after a volatile week for markets.
“I don’t think we’re having a recession,” Trump told reporters. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury1.9070.0360.00
US 1-YRU.S. 1 Year Treasury1.7510.0520.00
US 2-YRU.S. 2 Year Treasury1.5470.0690.00
US 5-YRU.S. 5 Year Treasury1.4750.0610.00
US 10-YRU.S. 10 Year Treasury1.6050.0650.00
US 30-YRU.S. 30 Year Treasury2.0850.0850.00

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