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Bond Report: U.S. 10-year Treasury yield pulls back from 1.60% in choppy session

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U.S. Treasury yields came off their highs on Monday as a resilient bond market weathered a bearish move earlier in the day.

What are Treasurys doing?

The 10-year Treasury note yield
BX:TMUBMUSD10Y
ended flat at 1.568%, after touching as high as 1.6% earlier in the day, while the 30-year bond yield
BX:TMUBMUSD30Y
fell 0.8 basis point to 2.243%. The 2-year note rate
BX:TMUBMUSD02Y
was up 1.3 basis points to 0.170%. Yields and bond prices move in opposite directions.

What’s driving Treasurys?

Debt issuance was in focus as investors digested $121 billion of new Treasurys from the 2-year and 5-year maturities. Ahead of the new supply, yields initially moved higher overnight as the market braced for the incoming issuance.

But that bearish impetus waned after U.S. durable-goods orders fell 0.5% in March, largely due to a sharp slide in aircraft bookings. Economists were expecting a 2.2% increase.

Like recent sessions, the bond market remained buoyant on Monday, as equities lacked direction despite a round of better-than-expected corporate earnings.

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.

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?

“One reason for the modest recovery in [Treasury] prices is stocks saw little reason to set new highs this morning when so many bellwether companies are announcing earnings,” said Jim Vogel, an interest-rate strategist at FHN Financial.

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