U.S. Treasury yields edged lower on early Tuesday’s trade as investors waited for the Federal Reserve to start it’s two-day get-together where the central bank may reinforce its messaging that it will continue to support the economy through the pandemic.
What are Treasurys doing?
The 10-year Treasury note yield
TMUBMUSD10Y,
1.604%
fell 0.7 basis point to 1.600%, while the 2-year note rate
TMUBMUSD02Y,
0.161%
was flat at 0.155%. The 30-year bond yield
TMUBMUSD30Y,
2.353%
slipped 1.3 basis points to 2.354%.
What’s driving Treasurys?
The Federal Reserve will draw attention this week as it kicks off its two-day meeting on Tuesday. The U.S. central bank is expected to maintain its dovish stance amid concerns stronger economic growth may pull forward the Fed’s timetable for tapering its asset purchases and raising rates.
Other global central banks continued to push back against the rise in long-term government bond yields. European Central Bank chief economist Phillip Lane
said he wanted yields to move in step with the economy.
Investors will handle a parade of U.S. economic data in the morning. February retail sales dropped 3%, showing the impact from winter weather and the rolling off of stimulus checks. January’s reading was however revised up to a 7.6% increase.
February month’s industrial production data, February’s import price index and the March reading of the National Association of Home Builders’ housing market index are all due later Tuesday.
Also potentially influencing trading later in the day, the U.S. Treasury Department will sell $24 billion of 20-year notes later in the afternoon.
What did market participants say?
“The biggest issue for the Fed right now is that the markets do not seem to believe in Powell’s signature policy of ‘average inflation targeting’ and its implication that rate policy will not be tightened for some period,” said Thomas Costerg, senior U.S. economist at Pictet Wealth Management.
