Data-driven rebound pushes US Treasury yields into positive territory, core PCE rises 3.3% year-on-year, curve compression persists
- US Treasury bonds fell in early Thursday trading due to the United States launching a second strike on Iran, but a subsequent short squeeze pushed prices away from their lows. The core PCE month-on-month was 0.2%, below the expected 0.3%. Q1 GDP was revised down to 1.6%, personal income was flat, and durable goods orders surged 7.9%, though details were mixed.
- After the data release, US Treasuries rebounded, led mainly by short covering. End-of-month index-linked buying also participated. The 2-year yield was 4.043%, the 10-year was 4.483%, and the 30-year was 5.006%. The 2s10s spread narrowed to 43.97 basis points, and the 2s30s spread narrowed to 96.30 basis points.
- The core PCE year-on-year was 3.3%, still far above the Federal Reserve’s 2% target. Today’s data will not shake the Federal Reserve’s stance. However, income failing to keep pace with inflation and consumption being forced to slow down have traders believing an economic slowdown may be approaching, prompting short covering. The price rebound has stalled, the curve compression pattern remains intact, and dealers are stepping into the belly of the curve in preparation for a $44 billion 7-year Treasury auction.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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Overseas capital is aggressively buying US stocks! Net inflows reached $942 billions over the past 12 months, marking a record since 1985.
According to data from the US Department of the Treasury, in the 12 months ending July this year, overseas investors made net purchases of US stocks totaling $942 billion, marking the highest rolling 12-month total since records began in 1985. The net purchases in the second quarter alone reached $426 billion, setting a new single-quarter record. Meanwhile, overseas demand for US Treasuries has noticeably cooled, with purchase volumes falling significantly. As a result, the US is facing higher costs in government debt financing.
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