Treasury Market Outlook: Treasury yields have dipped in risk-off trades
Treasury Market Outlook: Treasury yields have dipped in risk-off trades amid a sea of red in global equities following the hawkish Fed result Wednesday. The long end is leading the drop with the 10-year rate off 2 bps to 2.946%, while the 2-year is off 1 bps at 2.557%. EGB rates are higher, however, ahead of the ECB, which is expected to outline a QE exit strategy. The Bund is up 1.8 bps to 0.497%, with the Gilt up 0.7 bps to 1.371%. Italy is underperforming with the sovereign yield over 11 bps higher on fresh political jitters. Signs of rising inflation from German HICP data and stronger UK retail sales were bearish for bonds. Meanwhile, Asian equities tumbled nearly 1%. Though the PBoC didn't follow the FOMC's lead, trade jitters weighed after President Trump said he'd confront China "very strongly." The CSI 300 closed with a 0.4% decline. The Nikkei fell 0.99%. The momentum from Asia, the upcoming ECB and data have knocked European bourses lower. In the U.S. today there are a number of data reports, including May retail sales, May import and export prices, weekly jobless claims, and April business inventories. There are no larger-cap earnings reports scheduled.