Treasury yields in the United States have recovered from a five-month low, snapping a three-day decline.
While Covid strains appear to be spreading quicker in the West, the virus continues to plague Asia-Pacific.
In the midst of a silent session, vaccine news provides little consolation.
As traders seek fewer signs to the Fed’s next movements in recent days, the coronavirus (COVID-19) woes boost the US Treasury yield rebound.
However, the 10-year Treasury yield has recovered to 1.31 percent, up 2.6 basis points (bps), while the 30-year counterpart has recovered to 1.94 percent, up three basis points (bps) by press time.
Despite Australian Prime Minister Scott Morrison changing his mind on the AstraZeneca vaccine and encouraging people to get Pfizer vaccines early, covid infections in Australia reached a three-day high on July 8. Unfortunately, the virus cases in the United Kingdom have risen to a six-month high, while the numbers in Indonesia, South Korea, and Thailand remain gloomy.
The viral problems are posing a severe threat to economic recovery aspirations, indicating the necessity for further cheap money policies. Traders, on the other hand, appeared to be less intrigued in recent central bank rhetoric. The ECB recently indicated that it is willing to change inflation targets, despite polls implying a BOC early taper and those implying RBNZ rate hikes in late 2021.
The recent decrease in US Jobless Claims, as well as fears of a virus variety to test the off-pandemic scenario, are also supporting US Treasury yields. According to a recent study, coronavirus strains account for more than half of all covid infections in the United States in the last two weeks.
The bleak truth of the variant’s vaccine resistance and potential to spread more quickly adds to the market’s fears of such developments, favoring US Treasury yields. The same factors are weighing on gold prices, while the US dollar index (DXY) is gaining ground, up 0.05 percent as of press time.
The yield curve is continuing to flatten./n
