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Treasury yields showed little reaction to the three-year auction which showed strong demand for US debt. The bid-to-cover ratio improved to 2.62, which was highest levels in 2019. Recent focus on Treasuries have been with some countries reducing their US holdings. Russia and Turkey have steadily reduced their positions for high-quality US paper, but it appears the rest of the world still favors Treasuries.
The 10-year Treasury yield is down 0.5 basis points at 2.143%, while the 2-year yield is 2.0 basis points higher at 1.924%. The yield curve inversion between the 3-month and 10-year yields is continuing to improve and now stands at 12 basis points. The 10-year and 2-year spread, which has yet to invert in this cycle has narrowed to 21.95 basis points.
Rate cut expectations are still leaning towards a July cut, with markets seeing a 75.8% chance of a rate cut. The US dollar is slightly softer on the day, with the biggest declines to the British pound and euro.
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With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya
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