Treasury Market Outlook: the selloff in nervous equity markets picked up steam
Treasury Market Outlook: the selloff in nervous equity markets picked up steam after China threatened to take counter measures on the planned new round of U.S. tariffs. Core European bourses are over 1% lower, with U.S. futures down about 0.15%, having bounced off of good earnings from Walmart. The Nikkei was 1.2% lower, and ASX lost -2.85% despite strong employment data, but Chinese shares rallied modestly. The risk-off trades have taken bond yields down too. The Treasury 30-year bond had dropped below 2% to trade at a new record low of 1.939%. The 10-year is 4.6 bps lower at 1.53%, with the 2-year down 6 bps to 1.51%. The yield curve is at 1.5 bps. Core EGB rates are about 2 bps lower with the Bund and Gilt making new record lows too, while the UK curve remains inverted. UK retail sales were stronger than expected. The Norges Bank did the expected and kept rates on hold, but highlighted increased uncertainty about the policy path. BTPs outperformed, but the MIB sold off as Italy's government is heading for a showdown on August 20 with the risk of new elections before long. It's a heavy calendar in the U.S. with July retail sales, preliminary Q2 productivity, the August Philly Fed and the Empire State index, July industrial production, weekly jobless claims, June business inventories, the NAHB housing market index, and June TIC numbers. The Treasury announces re-opened 30-year TIPS.