Treasury yields fell on Tuesday, with the 2-year rate posting its biggest drop in more than a month, after data showed fewer U.S. job openings in July and declining consumer confidence this month.
What happened
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
declined 12.1 basis points to 4.888% after factoring in new-issue levels. Tuesday’s level is the lowest since Aug. 10, and produced the largest one-day drop since July 13, based on 3 p.m. figures from Dow Jones Market Data. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
retreated 8.9 basis points to 4.121% from 4.210% on Monday. Tuesday’s level is also the lowest for the 10-year yield since Aug. 10. -
The yield on the 30-year Treasury
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fell 5.4 basis points to 4.235% from 4.289% on Monday. The 30-year rate is down for the third straight trading session, and ended Tuesday at its lowest level since Aug. 9.
What drove markets
In data released on Tuesday, U.S. job openings fell to a 28-year low of 8.8 million in July, indicating businesses have scaled back on hiring, and the number of people quitting jobs touched the lowest level in 2½ years as the labor market cools off.
Read: Investors thirsting for a pre-pandemic normal take heart in falling number of job quits
Meanwhile, consumer confidence dipped to 106.1 in August from a revised 114 in the prior month.
Markets are pricing in an 86.5% probability that the Fed will leave interest rates unchanged at a range of 5.25%-5.5% on Sept. 20, according to the CME FedWatch Tool. The chance of a 25-basis-point rate hike to a range of 5.5%-5.75% at the subsequent meeting in November is priced at 43.3%
Treasury’s $36 billion of 7-year notes “was very strong,” according to BMO Capital Markets strategist Ben Jeffery.
What analysts are saying
“The question of whether we get more hikes will partly be determined by this week’s data, with several important releases coming up,” said strategist Henry Allen and others at Deutsche Bank.
“In the U.S., the main highlight will be the jobs report on Friday, where our U.S. economists expect nonfarm payrolls to have slowed further to +150k in August. That would be the slowest growth since December 2020, and they see that pushing the unemployment rate up a 10th to 3.6%.”
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