Economist's Insights

Today’s Trading Activity – Treasurys Trimmed their Overnight Rise as Stocks Fell Back From Record Levels

Jan 29, 2018

The daily top for Treasury yields was in ahead of U.S. trading as the curve spent the remainder of Monday drifting back from those multi-year high levels. The 2-year yield pulled back to unchanged at 2.12% after rising to as high as 2.16% earlier. The 5-year yield finished up 2.0 bps at 2.49% after reaching as high as 2.53% around 7 a.m. CT. The 10-year yield gained 3.4 bps to 2.69% but ended below its daily peak of 2.73%. The morning’s economic data was solid, including strong spending and a fourth month of firming in the YoY PCE inflation rate (although it remained at 1.5% when rounded), but unable to push yields further above their recent ranges. Adding to the slight reversal lower of the yield curve was a recoil by U.S. stocks following big gains last Friday that sent the major equity indices to new record closes.

Five of the 11 S&P sectors fell more than 1% to start the week and energy companies were the biggest drag on both the Dow and S&P. Crude prices fell back from their highest levels in more than three years on expectation that U.S. inventories rose last week for the first time in 11 weeks. Also hurting the commodity was a jump in the U.S. Dollar which makes the commodity more expensive for foreign purchasers in their domestic currencies. The Dollar rebounded slightly from a more-than-three-year low set last Friday but pared an overnight gain by half during U.S. trading.