Treasury Yields Extend Their Decline

Treasury yields fell globally as the latest U.S. data fuelled concerns about a possible recession. Market participants are increasingly questioning whether central bank policies aimed at curbing inflation could trigger a global economic downturn. The yield on the benchmark 10-Year U.S. Treasury Note lost 7 basis points from 3.47% to 3.40% while the yield on the 2-year T-note hovered near 4%. Fed fund futures slid by 4 basis points (May 2023: 95.015) with expectations growing for the Fed to cut rates before year-end. December 2023 futures contracts ended the week at 95.56.

In Europe, the yield on the German 10-year Bund fell 11 basis points week-over-week, from 2.29% to 2.18%, while the yield on the French 10-year OAT closed 10 basis points lower to 2.70%.

Investment grade corporate bond prices were up 0.96% in Europe (IBOXX € Liquid Corporates index) and up 0.73% in the U.S. (IBOXX iShares $ Investment Grade Corporate Bond Index).

High-yield bonds edged up 0.12% in Europe (IBOXX € Liquid High Yield Index) and edged down 0.09% in the U.S. (Markit iBoxx USD Liquid High Yield Capped Index).

Emerging debt in local currencies gained 0.19% while the dollar index shed 0.53% below 101.75.