US Treasury prices slid Tuesday as stocks bounced back from Monday’s big selloff. The market ticked lower into the open, saw a brief, post-trade price bump back into positive territory before spending the remainder of the session grinding in a lower range. Prices, however, continued to trade near levels last seen in late March and early April with the long bond leading lower while the 2- and 5-year took less heat.
Concerns cooled over the US-China trade negotiations and the back-and-forth tariff threats which had sparked the major meltdown Monday, drawing in risky-business and softening the flight-to-quality bid.
Late word that Treasury Secretary Steven Mnuchin plans to visit Beijing “soon” had minimal impact on activity.
The April import and export price release showed both rose just 0.2% versus the 0.7% and 0.6% rises expected. The prices followed a 0.6% increases for both inputs in March with exports revised from 0.7%.
The 30-year yield settled near 2.853% versus a 2.837% low, 2.86% high and 2.838% close Monday. The 10-year yield went out near 2.419% from a 2.402% low, 2.428% high and 2.405% close. The 5-year yield settled near 2.20% against a 2.182% low, 2.21% high and 2.186% Monday. The 2-year yield went out near 2.207% versus a 2.186% low, 2.213% high and 2.193% close.
The curve trade rode a steeper slope but tempered earlier widening, with the 2-and 10-year yield spread near 21.4 from 21.2 after seeing the steepest levels since early April Monday. The 5-and 30-year yield gap settled near 65.5 from 65.2.
CME Group fed fund futures shaved the odds of an at least 25 basis point rate cut by the year-end Federal Open Market Committee meeting to 69.1% against 73.1% Monday and 58.3% May 7.
The Treasury will auction $50 billion 4- and $45 billion 8-week bills Thursday.
The April National Federation of Independent Business small business optimism index increased 1.7% to 103.5 after rising 0.1% to 101.8 in March and 0.5% to 101.7 in February.
San Francisco Fed President Mary Daly is scheduled to speak at 5:45 pm ET Tuesday.
Wednesday’s calendar picks up with the weekly Mortgage Bankers’ Association applications index due at 7 am.
The top-tier April retail sales and mid-tier May Empire State manufacturing numbers are both out at 8:30 am.
The April industrial production and capacity utilization data are due at 9:15 am.
The March business inventories and National Association of Home Builders’ housing market index are on at 10 am.
The March Treasury International Capital flows data are due at 4 pm.
Fed speakers include Vice Chair for Supervision Randal Quarles testifies before the Senate Banking Committee at 9:30 am with Richmond President Thomas Barkin speaks on the economy at 1 pm with a following Q&A.