U.S. Treasury yields were mixed on Tuesday as concerns about a potential economic recession continued to send investors in search of safety.
The yield on the benchmark 10-year Treasury note dropped 10 basis points to 2.805%, while the yield on the 30-year Treasury bond fell more than 10 basis points to 3.027%. Yields move inversely to prices, and a basis point is equal to 0.01%.
The 2-year Treasury yield fell less sharply than its longer-dated counterparts, causing it to trade above the 10-year yield. This inversion is widely cited as a recession indicator by professional investors.
Treasury yields are now well off their highs of the year, even as the Federal Reserve has signaled that it will bee aggressive to fight inflation.
“We’ve seen a huge reversal in the last couple of weeks in the 10-year. … But on the other hand, the Fed is going to meet again this month and most likely raise rates again. So we’ll see if this is short lived,” said Wayne Wicker, chief investment officer at MissionSquare Retirement.
In this shortened week, investors are looking ahead to the release of June jobs report data on Friday. According to Dow Jones estimates, job growth likely slowed in June, with 250,000 nonfarm payrolls added, down from 390,000 in May. Economists surveyed expect the unemployment rate to hold at 3.6%.
On Tuesday, May factory orders came in better than expected.
Minutes from the Federal Reserve‘s latest monetary policy meeting will also come into focus on Wednesday as investors look to assess the central bank’s interest rate hiking trajectory.
Auctions were held Tuesday for $45 billion of 13-week Treasury bills and $42 billion of 26-week bills.
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