NEW YORK (Reuters) – U.S. Treasury yields fell on Monday, consistent with the weak inventory market, as trade worries and international political tensions in locations corresponding to Hong Kong and Argentina supported safe-haven belongings.
FILE PHOTO: Flags of U.S. and China are displayed at American International Chamber of Commerce (AICC)’s sales space throughout China International Fair for Trade in Services in Beijing, China, May 28, 2019. REUTERS/Jason Lee
U.S. 30-year bond yields slid to their lowest since July 2016. U.S. long-term yields have fallen in six of the previous 9 periods, reflecting buyers’ diminished danger urge for food.
European bond yields have been additionally decrease on the day.
The U.S. yield curve has additionally flattened considerably, suggesting mounting nervousness. The yield unfold between U.S. 2-year and 10-year notes, a intently watched metric, narrowed to five.three foundation factors, the smallest distinction since a minimum of 2010, based on Refinitiv knowledge.
The bond rally was triggered by protests in Hong Kong over the weekend, which initially stemmed from opposition to a invoice permitting extradition to the mainland. That crippled Hong Kong’s airport, whereas in Argentina the defeat of President Mauricio Macri throughout main elections added to international stress.
“The Hong Kong demonstrations and their ability to shut down the airport and the surprise in Argentina took the wind out of the sails of the stock market,” stated Jim Vogel, rates of interest strategist at FTN Financial in Memphis, Tennessee.
“We’re back to worrying that things are still unsettled and so there’s no need to push stocks higher, and without that optimism, without that ‘things-are-getting-better’ impulse behind stocks, Treasury yields are moving to the lower middle of the range,” he added.
Italy additionally had political issues after the League get together final week filed a no-confidence movement towards its personal governing coalition. The get together’s populist chief Matteo Salvini hopes that the movement transfer will set off early elections and have him put in as the brand new chief.
Concern concerning the U.S.-China trade battle continued. Every week in the past, China allowed the yuan CNY=CFXS to interrupt by means of the important thing 7-per-dollar degree for the primary time since 2008, prompting Washington to label Beijing a foreign money manipulator and sparking market turmoil.
Analysts additionally stated Monday’s bond rally was exaggerated by a slew of holidays in Asia, notably Japan, Singapore and India.
In afternoon buying and selling, U.S. benchmark 10-year notice yields fell to 1.64% US10YT=RR, from 1.734% late on Friday.
Since the start of the yr, 10-year yields have fallen greater than 100 foundation factors, on monitor for its steepest drop in eight years.
Yields on 30-year bonds slid to 2.13% US30YT=RR, from 2.247% on Friday. Earlier, they fell to a greater than three-year low of two.119%.
At the brief finish of the curve, two-year yields slipped to 1.581%, from Friday’s 1.63% US2YT=RR.
“As long as there is global political tension, we’re going to get downward pressure on U.S. yields,” Stan Shipley, fastened revenue strategist, at Evercore ISI in New York, stated.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Will Dunham and Richard Chang