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Bond Report: 10-year Treasury yields hangs around six-week low as coronavirus fears dog Wall Street

Bond Report

Treasury yields ticked lower on Tuesday as worries about the rising number of COVID-19 cases in the U.S and around the world bolstered the bond-market, drawing inflows into haven assets like government paper.

What are Treasurys doing?

The 10-year Treasury note yield

traded near a six-week low at 0.627%, compared with 0.636% the day before. The 2-year yield

sat at 0.145%, after closing at 0.158% on Monday. The 30-year yield

edged lower to 1.381%, from 1.390%.

What’s driving Treasurys?

Investors are watching the rising number of coronavirus cases in at least with 35 U.S. states which are resulting in business activity slowing again. California Governor Gavin Newsom ordered bars in several of the state’s counties to close again.

Tedros Adhanom Ghebreyesus, head of the World Health Organization, on Monday said “the worse is yet to come,” regarding the state of the pandemic. His remarks came a day after COVID-19 reached two milestones: 10 million confirmed infections worldwide, and 500,000 deaths.

Despite the growing worries about the pandemic, equities managed to shrug off those concerns on Monday, with the S&P 500

gaining 1.5%. Stock-market futures, however, are pointing to a negative start Tuesday.

Fed Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin will speak in front of the House’s Committee on Financial Services. In his prepared remarks, Powell said a full economic recovery was unlikely to take place if Americans did not feel safe. New York Fed President John Williams and Fed Gov. Lael Brainard are also set to speak on Tuesday.

In U.S. economic data, April’s S&P CoreLogic Case-Shiller national home price index is set for release at 9 a.m. ET, followed by June’s Chicago purchasing managers’ index and the Conference Board’s consumer confidence index for this month at 10 a.m.

Over in China, the official manufacturing PMI for June came in at 50.9, according to the country’s National Bureau of Statistics. Readings above 50 signify an expansion in economic activity, while those below signal contraction.

What did market participants’ say?

“The positive reaction on Wall Street seems all the more puzzling given the clear potential for the fresh and seemingly rampant rise in cases across the U.S. to see a further, notable challenge to U.S. economic growth later in the year,” said analysts at Rabobank.

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