US Bond Market: Treasury Yields Rise Slightly, Benefiting from Stock Market Decline and Higher Oil Prices

During the U.S. afternoon trading session on Tuesday, U.S. Treasury futures recovered earlier losses, and Treasury yields turned slightly lower for the day. This was due to a broadening decline in the stock market and continued gains in WTI crude oil futures. The stock market weakness was mainly driven by another round of tech stock sell-offs, while oil prices extended their gains following reports that the U.S. Navy shot down an Iranian drone heading toward a U.S. aircraft carrier in the Arabian Sea. A busy corporate bond issuance calendar was dominated by financial sector deals, led by Bank of America’s multi-tranche, multi-maturity offerings.

Shortly after 3 p.m. New York time, Treasury yields across the curve were down by about 1 basis point, with the spreads within 1 basis point of Monday's closing levels.

The 10-year Treasury yield hovered around 4.27%, slightly lower on the day and outperforming German and UK government bonds.

The S&P 500 Index fell 1.2% before the close of the cash Treasury market, providing support for the bond market; the Nasdaq Index declined about 1%, with pullbacks in software stocks putting pressure on the market. WTI crude oil futures rose 2.8% in late trading, near the day's highs.

The corporate bond issuance calendar was led by financial institutions, with nine companies issuing a total of $21.4 billion, the majority coming from financial issuers; issuance this week is approaching $50 billion.

Earlier during the U.S. session, U.S. Treasuries were under downward pressure due to larger declines in European bonds; the yield on Germany’s 30-year government bond rose to its highest level since 2011, with the market continuing to focus on European government bond issuance.

At 4:00 p.m. New York time,

The 2-year Treasury yield was 3.5655%;

The 5-year Treasury yield was 3.8297%;

The 10-year Treasury yield was 4.2635%;

The 30-year Treasury yield was 4.8952%;

The spread between 5-year and 30-year Treasury yields was 106.37 basis points;

The spread between 2-year and 10-year Treasury yields was 69.59 basis points.

Editor: Ding Wenwu