By Mark DeCambre, MarketWatch
Longer-dated bond yields set to snap 4-session negative streak
U.S. Treasurys on Tuesday faced modest selling, pushing yields higher, as worries about world-wide economic contraction, which had sparked buying in government debt last week, appeared to be on pause.
The yield on the 10-year Treasury note rose 2.4 basis points to 2.442%, a day after hitting its lowest level since Dec. 29, 2017. The yield on the 2-year note climbed 3.7 basis points to 2.291%, while the 30-year Treasury bond yield picked up 2.4 basis points at 2.892%. Yields and bond prices move in opposite directions.
Long-dated yields were on pace to snap a four-session negative streak.
A modest rise in yields for government bonds on Tuesday come as U.S. stocks looked set to stage a rebound (http://www.marketwatch.com/story/dow-futures-climb-as-china-trade-talks-set-to-resume-2019-03-26) after a pair of shaky days for assets perceived as risky. Futures for the Dow Jones Industrial Average and the S&P 500 index were up by at least 0.5%.
"The rebound in US Treasury yields boosted global equities with most Asian indices closing in the green and US e-mini futures were also pointing to a positive start to Tuesday's trading session," wrote market analysts at XM (https://www.xm.com/european-open-preview-sterling-steady-as-may-loses-control-of-brexit-process-dollar-weighed-by-falling-us-yields-98492), in a daily research note on Tuesday.
Markets broadly have been unsettled after a rally took the yield on the 10-year note below the yield on the 3-month Treasury for the first time since 2007. The yield-curve inversion (http://www.marketwatch.com/story/10-year-german-bond-yield-flirts-with-zero-after-lackluster-eurozone-pmis-2019-03-22) that resulted is seen as a reliable warning of a potential recession within a year or two, and was credited with sparking a selloff in equity benchmarks.
The 3-month yield edged up to 2.454% early Tuesday.
Read:The yield curve inverted--here are 5 things investors need to know (http://www.marketwatch.com/story/the-yield-curve-inverted-here-are-5-things-investors-need-to-know-2019-03-22)
Declines in yields follow a Federal Reserve that signaled at its March 18-19 that it wasn't likely to raise rates in 2019, downshifting projections for rate increases to zero from two indicated in its December forecast. On top of that market participants say that the management of the central bank's balance sheet, may curtail debt supplies. Both futures that support higher buying in debt, driving yields lower.
"The shift in expectations comes after the Fed last week ruled out further rate increases in 2019, reinforcing its dovish stance," wrote analysts at XM in a Tuesday research note.
Also in focus on Tuesday, U.K. markets wrested control of the Brexit process from Prime Minister Theresa May in a late-Monday vote. Now, Parliament is bracing for a fresh round of votes to help resolve Britain's exit from the European Union, which had originally been set for a March 29 deadline.
U.K. 10-year Treasury notes , also known as gilts, were at 1.011%, little changed from Monday's levels.
Looking ahead, investors are awaiting a sale of about $40 billion in 2-year Treasury notes, which could influence yields.
On the data front, reports on housing starts and building permits for February are expected at 8:30 a.m. Eastern Time, while the Case-Shiller home price index for January is due at 9 a.m., followed by a reading on consumer confidence at 10 a.m.
(END) Dow Jones Newswires
March 26, 2019 08:11 ET (12:11 GMT)
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