Peripheral European bonds rally
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — U.S. Treasury prices rose Monday, extending gains from the previous session as investors recalibrated expectations of Federal Reserve policy.
The 10-year note 10_YEAR -0.16% yield, which falls as prices rise, was down 2 basis points on the day at 2.483%, according to Tradeweb. The yield fell 6.5 basis points on Friday.
Treasury prices sank last week after a GDP report showed surprisingly strong economic growth in the second quarter, intensifying concerns that the Federal Reserve would tighten monetary policy sooner than investors have priced in. However, a lackluster jobs report showed that many components of the labor market remain sluggish, suggesting the central bank would hold tight to its accommodative policies for some time.
Bond investors will digest more economic data this week, including a service-sector index from the Institute for Supply Management on Tuesday at 10 a.m., which is released alongside data on factory orders. Trade deficit numbers arrive on Wednesday at 8:30 a.m., and productivity data is released Friday at 10 a.m. See the full economic calendar here.
The 30-year bond 30_YEAR +0.09% yield fell 1.5 basis points to 3.283% while the 5-year note 5_YEAR -0.42% yield dropped 2.5 basis points to 1.650%.
The debt of struggling European nations rallied Monday after Portugal unveiled a plan to rescue struggling Banco EspĂrito Santo by breaking up the lender and moving its toxic assets into bad bank.
The Portuguese 10-year bond BX:TMBMKPT-10Y -0.86% yield dropped 7 basis points to 3.645%.
The 10-year Italian bond BX:TMBMKIT-10Y -2.44% yield sank 6 basis points to 2.696% and the 10-year Spanish BX:TMBMKES-10Y -1.21% yield slid 6 basis points to 2.493%.
