10-Year Treasury Yield Falls Below 1.70% As Bond Market Finds Equilibrium

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Yields on US Treasuries tumbled early Tuesday as the bond market stabilized following good economic data from the service sector and the labor market in recent days. The 10-year Treasury note TMUBMUSD10Y, 1,694% was at 1,694%, 2.4 basis points less than in the previous session. The TMUBMUSD02Y 2-year note, 0.172% remained stable at 0.176%, while the yield of the TMUBMUSD30Y 30-year bond, 2.343% fell 2.4 basis points to 2.337%.

What drives the Treasurys? Treasuries continued to stabilize after investors took in a stronger-than-expected March employment report and a more than 20-year high to gauge service sector activity. Strong data suggested that segments of the US economy hit by the pandemic were recovering rapidly as the pace of COVID-19 vaccines accelerated. However, for many traders, much of the wave of good news had been reflected in rising long-term government bond yields, allowing them to seek the next catalyst for another increase in yields. Investors will see some minor economic data from the United States on Tuesday. The Labor Department will release its March Job Opportunity and Job Rotation Survey at 10 am ET. Analysts say a market movement event could stem from the minutes of the Federal Reserve’s March meeting, scheduled for Wednesday. As the Fed’s interest rate hike in the market intensifies, investors will be looking to gain more clarity on how central bank officials are viewing the economic outlook and timing for takeoff. Rates have weathered a flurry of good US economic data and strong equity gains in quiet bond trading so far this week. Unfortunately, it is too calm to draw early conclusions about where rates are heading over the several weeks. At the moment, the yields are high enough to keep buyers interested, but low enough to avoid potential price spikes, “said Jim Vogel, interest rate strategist at FHN Financial.