Yields for government debt pulled back slightly Monday morning, with some attributing modest buying in Treasurys to elevated global tensions after U.S. airstrikes overnight in Iraq and Syria.
Fixed-income investors are mostly awaiting a key, monthly labor-market report due on Friday, as investors focus on the health of the U.S. economy amid its recovery from COVID.
Investors also were parsing the latest developments related to a $ 1 trillion infrastructure bill.
How Treasurys are performing?
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The 10-year Treasury note
TMUBMUSD10Y,
1.508%
yielded 1.510%, down from 1.535% at 3 p.m. Eastern Time on Friday. Yields for debt fall as prices rise.
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The 30-year Treasury bond
TMUBMUSD30Y,
2.133%
was yielding 2.135%, compared with 2.169% at the end of the week.
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The yield on the 2-year Treasury note
TMUBMUSD02Y,
0.258%
was at 0.258%, versus 0.270% on Friday.
On Friday, the 10-year Treasury note logged its biggest weekly yield gain since March 19, while the 30-year registered its largest weekly climb since Jan. 8.
Fixed-income drivers
Yields were retreating somewhat Monday but moves were modest as investors got set to close out June and the second quarter, ahead of a key report Friday on the jobs market.
Early in the action, investors were focused on a U.S. airstrike conducted Sunday against “facilities used by Iran-backed militia groups” near the border between Iraq and Syria, which appeared to stoke buying interest in Treasurys.
Debt investors also were watching a bipartisan infrastructure bill, that could deliver a fresh jolt to business activity in the U.S., while improving roads, bridges and tunnels. It was seen making further progress toward being completed after President Joe Biden over the weekend walked back comments that tied the $1 billion infrastructure bill to an antipoverty package.
Additional spending could weigh on government debt because such efforts are usually funded with Treasurys.
Looking ahead, investors will look to hear from New York Federal Reserve President John Williams at 9 a.m., Richmond Fed President Thomas Barkin is set to speak at 11:30 a.m. Meanwhile, Fed Vice Chair for Supervision Randal Quarles will speak at 1:10 p.m at a central bank digital currency event at the 2021 Utah Bankers Association Annual Convention.
What strategists are saying
“U.S. launches attacks in Syria and Iraq creating a slight ‘risk
-off’ session,” wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
“This week’s focus will be on U.S. jobs report on Friday as we continue
to look for a 1.6% to 1.4% 10-year yield range near-term,” he said.
