Treasury yields rise as investors return from the three-day US bank holiday weekend

Treasuries weakened on Tuesday, pushing yields higher as investors returned from a three-day US bank holiday weekend.

What returns do
  • The yield of the 10-year Treasury note TMUBMUSD10Y,
    up 6.6 basis points to trade at 3.304% as of 3:00 p.m. ET on Friday.

  • The yield of the 2-year Treasury Note TMUBMUSD02Y,
    rose 3.2 basis points to 3.196%.

  • The yield of the 30-year government bond TMUBMUSD30Y,
    rose 9.5 basis points to 3.388%.

What moves the market

Most US financial markets were closed for the June 16 holiday on Monday after yields posted a third straight weekly rise on Friday but ended multi-year highs set earlier in the week.

The Federal Reserve last week raised its benchmark interest rate by 75 basis points, or three-quarters of a percentage point, the largest such move since 1994, while Chair Jerome Powell said a move of 75 or 50 basis points could come in July. Other major central banks, with the exception of the Bank of Japan, have also tightened or prepared to tighten monetary policy in response to rising inflationary pressures.

Powell is due to testify before Congress Wednesday and Thursday this week as he briefs lawmakers on monetary policy semi-annually.

Fears that tighter monetary policy will trigger a recession have mounted as central banks have become more aggressive, contributing to sharp falls in equities over the past week. However, US stocks rallied on Tuesday with the Dow Jones Industrial Average DJIA,
up more than 640 points, or 2.1%, and the S&P 500 SPX,
Rally 2.4%.

In US economic data, existing home sales fell 3.4% in May to a seasonally adjusted annualized rate of 5.41 million, the National Association of Realtors said on Tuesday. Compared to May 2021, home sales were down 8.6%. The drop was in line with forecasts by economists polled by the Wall Street Journal.

Read: That’s why Larry Summers wants 10 million people to lose their jobs

What Analysts Say

“Not much has changed since last week in terms of expectations of central bank tightening or signs that inflationary pressures may be easing,” Raffi Boyadjian, senior investment analyst at XM, said in a statement. The recession remains investors’ top concern, so this week’s rebound in equity markets looks more like a technical correction after the strong selling of the past two weeks.” Treasury yields rise as investors return from the three-day US bank holiday weekend

Brian Lowry

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