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Bond Report: U.S. 10-year Treasury yield bounces back to 1.60% as investors eye debt supply

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U.S. Treasury yields rose early Monday, kicking off the week with a bearish tilt as investors eyed a rush of new debt issuance that could weigh on bond trading.

What are Treasurys doing?

The 10-year Treasury note yield
BX:TMUBMUSD10Y
was back up 3.2 basis points to 1.598%, while the 30-year bond yield
BX:TMUBMUSD30Y
climbed 1.7 basis point to 2.268%. The 2-year note rate
BX:TMUBMUSD02Y
was up 0.9 basis point to 0.166%.

What’s driving Treasurys?

Debt issuance will be in focus as investors digest $121 billion of new Treasurys from the 2-year and 5-year maturities later in the day. Ahead of new supply, dealers may bid yields higher to draw buyers and help the market take down the incoming issuance.

The trajectory of the pandemic is also drawing focus as coronavirus cases and deaths continue to decline in the U.S., even as the disease’s spread has worsened in some parts of the world, especially India.

In economic data, U.S. durable-goods orders are due at 8:30 a.m. ET, offering a snapshot of U.S. investment during the recovery. Economists are expecting a 2.2% increase in March.

The Federal Reserve’s midweek meeting will be eyed by some investors but few are expecting big shakes out of the get-together.

What did market participants say?

“The Fed has managed to convince the market that it is in no position to begin contemplating tapering, never mind raising rates, for — in their own words — ‘some time’,” said John Velis, macro strategist at BNY Mellon.

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