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Treasury yields were little changed to lower Monday morning as weak factory data in the US and an unexpectedly big drop in retail sales in China reinforced concerns about a global slowdown.
Weak data from China also underscored worries about a demand slowdown, sending oil futures lower in the New York morning. China’s National Bureau of Statistics said that retail sales fell 11.1% on year in April, widening from a drop of 3.5% in March. Economists polled by The Wall Street Journal had looked for a 5.4% decline.
The yield on the 10-year Treasury note TMUBMUSD10Y, 2.863% fell to 2.908% from 2.932% at 3 p.m. Eastern on Friday. Yields and debt prices move opposite each other.
The 2-year Treasury note yield TMUBMUSD02Y, 2.561% was at 2.578%, down from 2.597% Friday afternoon. The 30-year Treasury bond yield TMUBMUSD30Y, 3.056% was 3.089% down from 3.091%.
In data released on Monday, New York Empire State factory activity showed surprising weakness in May and plummeted 36.2 points to negative 11.6. Economists had expected a solid 16.5 reading, according to a survey by The Wall Street Journal.
Yields had also retreated last week in volatile trading for stocks, bonds and cryptocurrencies. Some analysts have argue that yields may have peaked, at least for now, after a brutal selloff in 2022 that took the 10-year rate to a 3 1/2-year high above 3.2% in intraday trade early last week.
Others see the pullback as a mere respite. While inflation may have technically peaked, it continues to run near its hottest in more than 40 years — and the Federal Reserve appears intent on moving aggressively to contain rate pressures, analysts said.
The earliest that “US 10yr yields have peaked in the cycle, relative to Fed Funds, was four months in 2000 (January peak at 6.8%, May Fed Funds peak at 6.5%). The past is only moderately useful when investors and traders try and figure out what the future brings, but I’d be surprised if we have seen the peak in US yields; more likely, equities will find a base and as dip-buyers emerge, and we’ll get another sell-off in Treasury bonds.
US stocks enjoyed a big bounce Friday, but it’s far from an all-clear for investors looking for signs that a selloff that’s put the S&P 500 index on the brink of a bear market is now bottoming out.
