Treasuries slump as traders buy US stocks

Wednesday, 03. April 2019 17:49

The euphoria and bets on success in the bilateral talks between the United States and China sent equities on Wall Street higher on Wednesday with the technology sector in the lead and it strongly slashed demand for sovereign debt. Treasuries dropped sharply, which means yields jumped, making the curve less flat. Markets showed some of the latest macroeconomic data is being priced in as a sign the slowdown in growth in China, Europe and the US could be bottoming out or at least pausing.

The two-year US Treasury note yield surged two basis points to 2.327% at 11:44 am ET. The ten-year benchmark was a stunning 4.2 points higher at 2.514, compared to the advance of 4.9 points to 2.927% in the 30-year bond rate. Corresponding futures dropped 0.05%, 0.23% and 0.57%, respectively.

The three-month yield grew insignificantly to 2.43% and the spread against the 10-year maturity widened after last week's inversion ended. The phenomenon has historically been a precursor to recession. However, the short-term yield remained substantially higher than the two-year counterpart.

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