Treasurys struggle for direction as stocks sharply reverse losses
Treasury yields held their ground Monday after stocks came off their lows, offsetting the geopolitical jitters from U.K. Prime Minister Theresa May’s decision to delay a vote on her Brexit plan in Parliament.
The 10-year Treasury note yield TMUBMUSD10Y, -0.41% was mostly unchanged at 2.856%, off the intraday low of 2.868%. The 2-year note yield TMUBMUSD02Y, -0.45% picked up 1.6 basis points to 2.727%, while the 30-year bond TMUBMUSD30Y, -0.45% slipped 1.6 basis points to 3.129%, its lowest since Sep. 13. Bond prices move in the opposite direction of yields.
Stocks bounced off their lows as semiconductor shares pushed the Nasdaq COMP, +0.74% higher on Monday. The late-day climb in risk assets helped to counter the geopolitical jitters from U.K. Prime Minister Theresa May said she would delay the vote in Parliament on her Brexit deal. May’s move will extend the climate of uncertainty for corporations and investors, drawing inflows into haven assets like government paper.
The yield for the 10-year British government bond yield TMBMKGB-10Y, +0.00% slipped 8.1 basis points to 1.186%, according to Tradeweb data.
“Brexit has paralyzed the U.K. government and it looks [like] Prime Minister May is inching towards a new leadership challenge coming very soon,” wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
The outlook for a weaker global economy has kept traders closely monitoring U.S.-China ties, after a senior executive of Huawei Technologies was detained for allegedly violating U.S. sanctions on Iran. Analysts worry the detention of Huawei’s chief financial officer will complicate negotiations to resolve the divide between Washington and Beijing over China’s trade policies.
What’s more, doubt has crept in over the results of the G-20 summit, with some saying the talks between President Donald Trump and China’s leader Xi Jinping did not pave a clear way to curbing trade tensions.
Bond buyers will also have to digest $78 billion of debt auctions this week spread over the 3-year, 10-year and the 30-year maturities. The wave of bond issuance in the wake of President Donald Trump’s tax cuts haven’t overwhelmed investors as much as feared, with the recent volatility in financial markets spurring demand for havens.