Treasury Market Outlook: risk aversion is keeping a solid bid in bonds
Treasury Market Outlook: risk aversion is keeping a solid bid in bonds amid geopolitical tensions, while Fed rate cut expectations are adding to demand too. The 2-year Treasury yield is 3 bps lower at 1.806%, with the 10-year is down 2 bps to 2.067%. The Bund has richened over 2 bps to -0.266%, which would be a new low. The Gilt has slipped 0.4 bps to 0.829%. Peripherals are 3 to over 4 bps lower. The JGB closed at -0.138%, down 1.6 bps. Stocks are weaker amid the tensions in the Middle East and a slowdown in Chinese industrial production to a 17-year low, though retail sales accelerated. The CSI fell 0.8%, with core European bourses 0.5% to 0.8% lower, and the S&P 500 future 0.3% lower. The Nikkei and ASX 200 managed modest gains. In other news, Russia cut rates and Draghi played down the impact of negative rates. In the U.S. there's May retail sales, industrial production, April business inventories, and preliminary June consumer sentiment.