Treasury yields in focus amid economic data

US Treasury yields rose on Tuesday as investors awaited the release of a fresh batch of economic data on the first trading day of the week.

The yield on the 10-year Treasury note benchmark was almost 3 basis points higher at 3,269%, while the yield on the 30-year Treasury bond traded 4.5 basis points higher at 3,339%. Yields move inversely to prices.

US markets were closed on Monday for the Juneteenth holiday.

Tuesday’s trading session comes after a volatile week that saw major central banks signal a more aggressive effort to curtail soaring inflation.

The Federal Reserve on Wednesday increased its benchmark funds rate by 75 basis points, the largest hike since 1994, with annual US inflation running at a 40-year high of 8.6% in May.

The Swiss National Bank then surprised markets with its first rate hike in 15 years on Thursday, while the Bank of England implemented its fifth consecutive hike.

The Fed “will keep hiking rates until inflation comes down unless one of three things happens,” wrote Joe Kalish, chief global macro strategist at Ned Davis Research.

“First is the liquidity and functioning of the financial markets,” he said. “Continued elevated levels and companies inability to tap the capital markets would give the Fed a red light.”

“Next are financial conditions that signal recession. These include credit spreads blowing out and recessionary bear markets for stocks. Credit spreads are still giving the Fed a green light, while stocks are flashing yellow,” Kalish added. “Last is rising unemployment. Although the job market is still judged to be tight, fewer job openings and rising unemployment claims could soon flip this yellow.”

On the data front, the Philadelphia Fed non-manufacturing survey for June will be released at around 8:30 am ET, with existing home sales for May set to follow slightly later in the session.

— CNBC’s Samantha Subin and Elliot Smith contributed to this report.


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