NEW YORK — US Treasury yields headed
lower for a second straight session on Tuesday, taking their cue
from stocks with both the S&P 500 and the Nasdaq index down, as
growth slowdown concerns continued to funnel investors to
safe-haven government bonds.
The benchmark US 2/10 yield curve remained inverted for a
fifth consecutive day, with the two-year yield exceeding that of
the 10-year by as much as 12 basis points. That’s
the largest inversion since at least March 2010, according to
Refinitiv data. It was last at -8.9 bps.
Other banks saw a slightly different level of inversion for
the 2/10 spread. BMO Capital said the 2s/10s pushed as low as
-10 bps, the most inverted spread since February 2007.
“The combination of monetary policymakers’ hawkish
conviction, building economic slowdown concerns, and an emerging
interest in buying duration has led to further curve
compression/inversion,” wrote BMO strategists Ian Lyngen and Ben
Jeffery wrote in a research note.
In late morning trading, US benchmark 10-year yields were
down 8 bps, at 2.9078%.
The US Treasury will auction 10-year notes later on
Wells Fargo rates strategist Zachary Griffiths, in a
research note on Tuesday, said he expects weaker demand for the
10-year note, given that the yield has fallen roughly 10 bps
from the previous auction clearing level and has “richened
Considerably Treasury versus 5s and 30s since the last auction.”
He also noted that US 10-year notes have become less
attractive to foreigners on an FX-adjusted basis.
Griffiths, for instance, pointed out that 10-year Treasuries
currently offer a euro-based investor roughly 100-bps less than
the 10-year German bund when hedging the first three months of
US 30-year bond yields were down 7.6 bps at 3.104%
On the short end of the curve, US two-year yields dropped
6 bps to 3.012%.
July 12 Tuesday 10:39AM New York / 1439 GMT
Price Current Net
Yield % Change
Three-month bills 2.1275 2.1688 -0.002
Six-month bills 2.695 2.7702 -0.003
Two-year note 99-245/256 3.0223 -0.048
Three-year note 99-216/256 3.0549 -0.048
Five-year note 101-42/256 2.9957 -0.054
Seven-year note 101-140/256 3.0021 -0.062
10-year note 99-152/256 2.9225 -0.069
20-year bond 98-96/256 3.3627 -0.068
30-year bond 95-120/256 3.109 -0.071
DOLLAR SWAP SPREADS
Last (bps) Net
US 2-year dollar swap 24.00 -1.25
US 3-year dollar swap 5.50 -1.25
US 5-year dollar swap 1.00 -0.75
US 10-year dollar swap 7.75 -0.25
US 30-year dollar swap -26.00 -0.75
(Reporting by Gertrude Chavez-Dreyfuss
Editing by Nick Zieminski)