Treasury yields rose Tuesday morning after falling for four straight days, with Wall Street looking set to recover from Monday’s rout after China’s central bank cut interest rates to ease selling pressure in the country’s stock market.
The yield on the 10-year Treasury TMUBMUSD10Y, +3.43% rose 5.4 basis points to 2.052%, after falling on Monday below 2% for the first time in nearly four months. The yield closed at 1.997% on Monday, its lowest point since April 28, and has shaved off around 50 basis points since early June.
Among other maturities, the yield on the two-year note TMUBMUSD02Y, +7.83% gained 3.2 basis points to 0.600%, after falling on Monday to its lowest point since July 8.
The 30-year yield TMUBMUSD30Y, +3.02% gained 5.7 basis points to 2.776%, after reaching on Monday its lowest level since April 27. The yield has plunged close to 50 basis points since June.
Treasury yields rise when prices fall and vice versa. Rising yields indicate that there are selling pressures in the Treasury market.
Analysts attributed the bond selling to a broad risk-on sentiment, after the People’s Bank of China injected 150 billion yuan ($23.40 billion) into the financial system.
“Pretty much all markets have responded in risk-on fashion with stocks soaring, oil rising, the dollar a tad firmer and bond yields, as a derivative, up a lot,” David Ader, head of government bond strategy at CRT Capital Group, said in a note.
“It’s a sentiment-driven market,” said Jim Caron, a fixed-income portfolio manager with Morgan Stanley Investment Management. Caron added that the level of Treasury yields didn’t accurately reflect economic fundamentals.
Meanwhile, in Europe government bond yields also jumped as stock markets also recouped some of their losses after the market suffered its worst selloff in nearly seven years. Investors also welcomed the news that the closely watched Ifo survey of German business confidence for August came in better than anticipated.
The yield on the benchmark German 10-year bund TMBMKDE-10Y, +22.63% rose 12.1 basis points higher at 0.698%.
