Bond Report: Treasury yields rise as stocks shrug off trade-war fears

Bond Report: Treasury yields rise as stocks shrug off trade-war fears

Treasury prices weakened Monday, pushing up yields, as investors appeared set to bid up U.S. equities, ignoring escalating trade tensions and focusing on strong domestic fundamentals.

What are yields doing?

The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, +0.97%  rose 3.3 basis points to 2.852%, while the 2-year note yield TMUBMUSD02Y, +1.13%  rose 2.9 basis points to 2.557%. The 30-year Treasury bond yield TMUBMUSD30Y, +0.71%  picked up 2.5 basis points to 2.959%. Yields and bond prices move in opposite directions.

What’s driving the market?

Yields fell on Friday after a stronger-than-expected rise in June nonfarm payrolls was offset by a rise in the U.S. unemployment rate rose to 4% from 3.8% while wage gains remained subdued. The rise in the unemployment rate came as more people joined the workforce, which combined with the subdued wage growth helped ease inflation concerns.

Meanwhile, U.S. stock-index futures pointed to a higher start for Wall Street Monday, building on last week’s gains.

What are analysts saying?

“U.S. releases will continue to dominate the data calendar with the U.S. [consumer-price index] due on Thursday,” wrote analysts at Commerzbank, in a Monday note.

“Our economists expect both the headline and core rate to stay at last month’s levels of 2.8% and 2.3% respectively in line with the consensus. With the Fed having already declared ‘mission accomplished’ and following last Friday’s disappointing hourly earnings, a significant upside surprise is probably required to unsettle markets,” they said.

What are other markets doing?

The yield on the 2-year British gilt TMBMKGB-02Y, +4.30%  was up 3 basis points at 0.303% after touching its highest level since May 24, shrugging off the resignation of David Davis, the minister in charge of negotiating the U.K.’s exit from the European Union, on Sunday night.

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