U.S. Treasury yields inched higher on Monday as traders looked ahead to key inflation data later this week and a series of debt auctions that could offer clues to demand for government paper.
How are Treasurys performing?
The 10-year Treasury note yield TMUBMUSD10Y, +0.07%[1] added 0.4 basis point at 2.950%, after posting a 1.3 basis-point weekly drop late Friday in New York. The 30-year bond yield TMUBMUSD30Y, +0.03%[2] rose 0.5 basis point to 3.120%, following a weekly decline of 1.1 basis points.
The 2-year note yield TMUBMUSD02Y, +0.17%[3] the most sensitive to shifting expectations for monetary policy, was little changed at 2.499%. The short-dated note on Friday logged a weekly drop of 1.5 basis points.
The gap between the 2-year and 10-year Treasury notes, often considered the heart of the yield curve, was at 45.1 percentage points, narrowing slightly since late-Friday in New York.
Concerns that the yield curve could eventually invert, with short-dated yields moving above long-dated yields, is keeping investors on edge. An inverted yield curve has often preceded a recession.
Bond yields fall as prices rise, and vice versa.
What’s driving the bond market?
Trading action for government bonds was muted as investors looked past geopolitics and global trade issues to the more pressing issues of bond supply and inflation.
The Trump administration is reportedly seeking new rules to limit that would penalize the Mexican auto industry unless it boosts wages to roughly $16 an hour in an effort to retool the North American Free Trade Agreement. That development follows discussions between China and the U.S. last week that were seen as unproductive, failing to end with an agreement on trade to avert a full-blown trade dispute between the world’s two largest economies.
The U.S. crude-oil futures CLM8, +0.40%[4] benchmark topped $70 a barrel[5] for the first time since late 2014, rising 1% alongside a similar increase in the international benchmark Brent crude as energy traders awaited word on whether the U.S. would pull out of a nuclear pact with Iran, and impose fresh sanctions on the oil producer, which could disrupt crude output.
See: Oil prices have surged above $70—here are 4 key reasons behind the rally[6]