PrefBlog

It used to be that bond yields were headed straight up. Not any more:

U.S. benchmark 10-year Treasury yields posted their largest one-day drop on Tuesday since Britain voted to exit the European Union nearly two years ago, as a political crisis in Italy, the third-largest euro zone economy, fueled a flight to safe-haven assets.

The steep rally in Treasury prices on Tuesday could be a blip in what has been a relentless sell-off since early September. Interest rates have been supported by the Federal Reserve’s tightening policy with 10-year Treasury yields rising to a high of 3.12 percent earlier this month.
…
In afternoon trading, U.S. 10-year yields dropped to seven-week lows of 2.759 percent and were last at 2.788 percent. Yields fell 14.6 basis points, the largest decline since June 24, 2016.

U.S. 10-year Treasury futures were on track to record their highest single-day volume ever, according to a CME Group spokeswoman said. As of late Tuesday, a combined 8.58 million 10-year T-note futures changed hands with roughly 5.31 million contracts for June delivery transacted TYM8, according to CME data.

The vital-for-FixedResets-and-mortgages Canada 5-year rate dropped to 2.03% … there will be some who will think that’s a typo given recent history:

Click for Big

And so, of course, preferreds got whacked, with TXPR down 62bp on the day.

This entry was posted on Tuesday, May 29th, 2018 at 11:01 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.