Treasury yields fell Tuesday as concerns about the spread of the delta variant of the coronavirus that causes COVID-19 continue to cast a shadow over economic growth expectations and as investors awaited data on U.S. retail sales for July.
What are yields doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.226% fell to 1.228% versus 1.255% at 3 p.m. Eastern on Monday. Yields and debt prices move in opposite directions.
- The 2-year note yield TMUBMUSD02Y, 0.201% edged down to 0.197% from 0.205% Monday afternoon.
- The yield on the 30-year Treasury bond TMUBMUSD30Y, 1.895% traded at 1.90%, compared with 1.923% on Monday.
What’s driving the market?
Yields remained under pressure as investors continued to track the spread of the delta variant and a rise worldwide in COVID -19 cases. New Zealand took drastic action Tuesday, with the government putting the entire nation into a strict lockdown for at least three days after finding a single case of coronavirus infection in the community.
The continued spread of the virus is being blamed for renewed congestion at ports in China, while contributing to worries about further lockdowns and a slowdown in economic activity around the world.
Data on July U.S. retail sales is due at 8:30 a.m. Eastern. Economists surveyed by The Wall Street Journal expect sales to show a fall of 0.3%. Sales, excluding autos, are expected to rise by 0.2%.
July data on industrial production and capacity utilization is due at 9:15 a.m., while figures on June business inventories and a home-builder’s index are due at 10 a.m.
Federal Reserve Chairman Jerome Powell is scheduled to talk to teachers and students from around the country, and take questions, in a virtual meeting at 1 p.m. Eastern.
What are analysts saying?
“U.S. retail sales data will be a focus today,” said Steve Barrow, head of G-10 strategy at Standard Bank, in a note.
“Last week we saw that plunge in the University of Michigan’s provisional
consumer confidence survey for August to its lowest level in a decade and that figure may have helped dent confidence about the sales environment,” he said. “However, for our part, we think that the risk lies to the higher side of the consensus for both the headline and the core data and, if that’s correct it may help to lift equities, yields and the dollar.”
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