Bond Report: Treasury yields edge higher, pushing 10-year rate above 2.8%, ahead of Wednesday’s Fed minutes report

by | Aug 16, 2022 | Stock Market

U.S. bond yields nudged higher on Tuesday on diminished demand for fixed-income assets as investors prepared for this week’s release of minutes from the Federal Reserve’s July meeting.What’s happening
The yield on the 2-year Treasury
rose 4.8 basis points to 3.249% at 3 p.m. Eastern.

The yield on the 10-year Treasury
increased 3.2 basis points to 2.822%.

The yield on the 30-year Treasury
advanced to 3.113%, up 1.7 basis points.

What’s driving markets Bond buyers were on the back foot, pushing yields a touch higher, as a rally in the previous session — bolstered by a very weak U.S. East Coast manufacturing survey and signs of a slowing Chinese economy — showed signs of fading.

“After U.S. activity and inflation data last week had an air of ‘goldilocks’ feel to them, economic data out of China and the U.S. to start the week came in clearly on the ‘too cold’ side for global growth,” said Brian Daingerfield, head of G10 FX strategy at NatWest Markets. The 10-year to 2-year spread of about negative 43 basis points means the yield remains deeply inverted, suggesting a looming economic downturn. In U.S. data released on Tuesday, construction on new U.S. homes fell a seasonally adjusted 9.6% in July to 1.45 million, while building permits also dropped 1.3% to 1.67 million. U.S. industrial production was up sharply that month, rising 0.6%.

Meanwhile, investors are awaiting Wednesday’s release of the minutes from the Fed’s July 26-27 policy meeting. Markets are pricing in a 59.5% probability that the Fed will raise interest rates by another 50 basis points to a range of 2.75% …

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