Treasury yields fell Monday as investors looked ahead to data that may provide further clues to the Federal Reserve’s rate path, while global financial markets remained calm following a short-lived mutiny by the mercenary Wagner Group that raised questions about Russian President Vladimir Putin’s grip on power.
What yields are doing
-
The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.746%
fell to 4.708%, down from 4.748% at 3 p.m. Eastern on Friday. -
The 10-year Treausury note
TMUBMUSD10Y,
3.732%
yielded 3.681%, down from 3.737% Friday afternoon. -
The rate on the 30-year Treasury bond
TMUBMUSD30Y,
3.821%
dropped to 3.772% from 3.819% late Friday.
What’s driving the market
The mutiny, led by Wagner Group chief Yevgeny Prigozhin late Friday, saw the mercenary paramilitary force take over Russia’s southern military headquarters in Rostov-on-Don amid little resistance before marching largely unchallenged toward Moscow. Putin, without mentioning him by name, accused Prigozhin of treason.
The advance halted a little more than 120 miles from the capital on Saturday before Prigozhin abruptly stood down in a deal that would see him sent to Belarus and charges against him of leading an armed rebellion dropped.
The events sent no major shock waves through global financial markets, while oil prices saw only a modest rise. But analysts warned of the potential for further internal strife to stoke volatility.
Read: What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened
10- and 30-year Treasury yields fell last week, while short-end yields rose, deepening an inversion of the yield curve and highlighting growing recession fears. A flurry of rate hikes by European central banks last week heightened worries about growth, while Federal Reserve Chair Jerome Powell reiterated that a “strong majority” of policy makers were in favor of two more quarter-point rate increases after the central bank opted earlier this month to leave its fed-funds rate unchanged.
Meanwhile, Germany’s Ifo business-climate index declined to 88.5 in June from 91.5 in May, according to data from the Ifo Institute published Monday. The reading fell short of expectations of 90.5 according to economists polled by The Wall Street Journal.
Investors will hear from Powell again on Wednesday, while the personal-consumption expenditures index, which includes the Fed’s favored inflation gauge, is set for release on Friday.
What analysts say
“The combination of flagging German business confidence, geopolitical uncertainty linked to the Russian near-mutiny, and reports of lackluster holiday travel spending in China have combined to push 10-year yields as low as 3.68%,” said Ian Lyngen and Benjamin Jeffery, rates strategists at BMO Capital Markets, in a Monday note. “The belly (of the yield curve) has been driving the rally, although rates across the curve are lower as the final week of the second quarter gets under way.”
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