Treasury Market Outlook: Treasury yields have dipped about 1 bp lower
Treasury Market Outlook: Treasury yields have dipped about 1 bp lower as stocks erase earlier gains and a more cautious tone returns. The 2-year Treasury is at 1.75% and is down from a high of 1.80% in Asian trading, with the 10-year at 2.03% after hitting 2.06%. EGB rates are also sliding with the Bund now testing -0.308% and the Gilt at 0.832%. The JGB finished 0.8 bps richer at -0.15%. Equities were firmer in Asian action with the Nikkei and the CSI 300 up over 1%. The Dow mini is fractionally lower, while the Gilt is down 0.35% and the DAX barely in the green. Media reports of a tentative U.S.-China truce underpinned broad gains during the Asian session. But weaker than expected ESI economic confidence and higher than anticipated German inflation have weighed. The markets are also having second thoughts on central bank easing expectations, especially if there is progress on the trade front. Trading is likely to remain cautious into quarter-end and the Trump-Xi talks. Today's calendar features the third look at Q1 GDP, weekly jobless claims, and May pending home sales. The Treasury auctions $32.0 B of 7-year notes. Earnings include Accenture, ConAgra, McCormick, Nike, Shaw Communications, and Walgreen Boots.