Treasury Market Outlook: Treasury yields are down fractionally
Treasury Market Outlook: Treasury yields are down fractionally, but off earlier lows, as risk appetite improves.The 10-year yield is down 0.5 bps to 2.855%, while the 2-year is flat at 2.608%. Core European are up modestly too, while peripheral rates are lower, after Asian sovereigns finished with small declines. The Bund and Gilt are 0.4 bps higher at 0.305% and 1.238%, respectively. Italian and Spanish 10-year yields are both 4.0 bps lower. Equities are mostly firmer after Wall Street's gains Friday on hopes for easing in U.S.-China trade tensions with low level talks this week. China's CSI 300 climbed 1.1%, though Japan's Nikkei finished with a 0.3% loss. The DAX is over 1% firmer, leading the gains in Europe. Turkish stocks rebounded after a swap agreement with Qatar and ahead of a long religious holiday starting Wednesday which should provide some temporary respite from contagion fears, although USD-TRY surged over 6.00 again. Data overnight included German PPI, which remained elevated at 3.0% y/y, and the U.K. Rightmove House price data showed another drop on the month. The latest Bundesbank report remained cautiously optimistic on the economy, while Bundesbank President Weidmann didn't sound overly hawkish, although he is unlikely to back renewed calls from Italian officials that the ECB should postpone the planned exit from net asset purchases. Today's U.S. calendar includes comments on the economy from the Fed's Bostic and earnings from Estee Lauder. The data slate is empty to start the week, but there is plenty to look forward to with housing data, the FOMC minutes, the U.S.-China trade negotiations, and the Jackson Hole KC Fed symposium. Many retailers also will be announcing this week.