Treasury yields rose in early Monday trading as U.S. stock futures pointed to a higher open after a torrid selloff last week.
The 10-year Treasury note yield TMUBMUSD10Y, +0.49% rose 2.2 basis points to 3.098%, while the 2-year note yield TMUBMUSD02Y, +0.43% ticked higher by 1.6 basis points to 2.826%. The 30-year bond yield TMUBMUSD30Y, +0.24% added 1.3 basis points to 3.328%. Bond prices move in the opposite direction of yields.
Investors will gear up for personal income data at 8:30 a.m. Eastern, which could give signs if consumption will continue to drive the U.S.’s recent economic momentum. Personal income and consumption are both forecast to increase 0.4% in September. That could also help lift inflation, a key consideration for the Federal Reserve as it debates the need for further rate hikes amid growing trade tensions and tightening financial conditions.
Such fears have helped to drive stocks lower, but U.S. equities are set to rebound on Monday. With risk assets on the rise, appetite for haven assets has diminished, sending yields for Treasurys higher. Futures for the Dow Jones Industrial Average YMZ8, +0.66% are up 0.5%, and for the S&P 500 ESZ8, +1.04% are up 0.9%.
On the Fed front, Chicago Fed President Charles Evans will speak at 9:45 a.m. In recent speeches, Evans has advocated for the central bank to keep raising interest rates closer to the neutral rate, the level at which monetary policy is neither accommodative nor restrictive. But other Fed officials have warned investors from assuming the bank is operating with precision when it comes to the neutral rate.
The Italian bond market rallied after S&P Global Ratings dropped Italy into “negative outlook” late Friday, but did not follow up with a ratings downgrade. The decision relieved some investors who speculated S&P would follow Moody’s example by cutting Italy’s credit rating to one notch above sub-investment grade.
“Ratings will no longer be much of a risk for some months in our view. The removal of tail risk on the ratings front deserves to be rewarded with a tighter bid-ask [spread],” said analysts at Societe Generale, referring to the difference between the prices offered by buyers and sellers. A tighter spread tends to indicate a well-functioning market.
The 10-year Italian government bond yield TMBMKIT-10Y, -3.60% fell 13.3 basis points to 3.321%, according to Tradeweb data.
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