Treasury yields are off their recent highs but remain above 3.2%. Today’s marginal decline in Treasury yields is likely driven by investors moving money from equities to fixed income. However, this respite in spiking US Treasury yields may be temporary.
There is a glut of $230 billion US Treasury issuances this week. At the same time, traditional buyers like China and the Federal Reserve are reducing their holdings. The rise in Treasury supplies and softening overall demand will continue to pressure Treasury prices while pushing yields higher.
This is part of the reason why Asian stocks started the day down for the most part. A couple of the notable moves across Asia today:
- Japan’s NIKKEI 500 Index moved up 0.40%;
- The Shanghai Composite Index gained 0.18%;
- Hong Kong’s Hang Seng Index is up 0.08%;
- South Korea’s KOSPI Index dropped 1.12%;
- India’s SENSEX gained 1.35%.
European stock markets are falling at the open today also. A look at some of Europe’s top indices shows:
- London’s FTSE Index is down 0.04%
- The German DAX Index dropped 0.35%;
- The FTSE Italia All Shares Index is up 0.21%;
- The French CAC 40 Index fell 0.49% at the open.
European stock markets will continue to focus on issues within their own markets such as the Brexit negotiations and the Turkish Lira Crisis. Additionally, European investors are keeping a close eye on developments in Italy as investors have become fearful of potential anti-EU measures by the new government.
US Futures Are Trading Lower in Pre-Market Action
The U.S. stock market is moving lower in pre-market trading. Indeed, the NASDAQ and the S&P 500 futures are down 0.13% and trading sideways, respectively.
Investors will continue to take their cues from the news cycle heading. Accordingly, any new developments in the Trump legal morass or global trade disputes could see it drive markets in either direction.