Market Watch – Treasury yields fall near two-month low on weak data

Bonds, Commentary, News

Treasury yields traded to their lowest levels in two months, after a round of weaker-than-expected economic data were interpreted as an indication that the Federal Reserve could push back the first interest-rate increase in nearly a decade. Bond prices move inversely to yields.

The ISM manufacturing-composite index came in below expectations on Monday, ahead of this week’s packed data calendar culminating with the July official jobs report on Friday.

Also, the Commerce Department said American consumers spent at a slower pace in June while a key inflation reading— the core PCE price index—rose only 0.2% in June and 1.3% year over year, significantly below the Fed’s 2% inflation target.

The weak economic data sparked a Treasury rally, which weighed further on yields after they recorded Friday their largest three-week decline since April. Friday’s rally was sparked by news that U.S. employees’ wages and benefits rose a record-low 0.2% in the second quarter.

On Monday, the yield on the 10-year Treasury TMUBMUSD10Y, -0.37% slid 3.4 basis points to 2.171%, its lowest level since June 1, according to Tradeweb.

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