Treasury yields slip after Empire State, home-builder reports

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U.S. Treasury yields retreated to start the week on Monday, after a pair of economic reports offered a mixed picture of the health of the economy.

What are Treasurys doing?

The 10-year Treasury note yield (BX:TMUBMUSD10Y) fell 2.3 basis point to 0.685%. Last week, the benchmark maturity hit an eight-week high on Thursday.

The 2-year note rate (BX:TMUBMUSD02Y) was little-changed at 0.145%, after it saw a weekly rise last week of 2 basis points, while the 30-year bond yield (BX:TMUBMUSD30Y) retreated 2.6 basis points to 1.416%.

All three benchmarks registered their biggest weekly yield climb since June 5 last week.

What’s driving Treasurys?

Market participants resumed buying government bonds on Monday after the three main debt benchmarks saw their biggest yield climb in more than two months. The moves for Treasurys come despite a slight uptrend for equity benchmarks to start the week, as investors digest a pair of economic reports and assess a market teetering on the brink of a record high.

A reading on business conditions in the New York area, the Empire State index, fell 13.5 points to 3.7 in August, signaling a slower pace of growth, the regional Fed bank said Monday. Economists had expected a reading of 17, according to a survey by Econoday. The index had surged in July after being in negative territory since the pandemic began.

Separately, a reading of home builder confidence was much stronger than expected, coming out slightly earlier than had been expected. Builder confidence in the newly built, single-family home market jumped six points to 78 in August on the National Association of Home Builders/Wells Fargo Housing Market Index, with the reading at the highest level on record for the report. Builder sentiment plunged to 30 in April. A reading above 50 is considered upbeat.

What did market participants’ say?

“With the better housing figure and weaker NY number, Treasury yields are at the lows of the day with the 10 [year] yield at .68% and the 30 yr bond yield at 1.41-.42%,” wrote Peter Boockvar, chief investment officer, at Bleakley Advisory Group, in a note.

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