US yields climb as AI fears cool
TLT•US Treasury yields rose on Monday as stocks climbed and concerns about the impact of higher interest rates on AI stocks eased. The 10-year yield added 4.2 basis points to 5.14%, while markets priced a 17.2% chance of a Fed rate hike next week.
1. Yields rise as stocks recover
The 10-year Treasury yield rose 4.2 basis points to 5.14%, reversing part of its 14.6-basis-point drop last week. Stocks rose Monday, with the Nasdaq Composite gaining more than 1% as AI stocks recovered, easing the flight to safety that had supported Treasuries.
2. Housing gauge hits low
The National Association of Home Builders/Wells Fargo Housing Market Index fell three points to 29, its lowest level since June 2012 and below the 31 estimate from economists polled by Reuters. The 30-year Treasury yield gained 4 basis points to 5.477%, and the two-year yield added 2.5 basis points to 4.761%.
3. Auctions and rate expectations
The Treasury plans to auction $13 billion in 20-year bonds Wednesday and $26 billion in five-year Treasury Inflation-Protected Securities Thursday. CME FedWatch showed a 17.2% chance of a rate hike of at least 25 basis points next week, down from 21% a week earlier and 57.6% a month earlier. Bank of America economist Aditya Bhave said the firm maintained its call for a hike, but with low conviction.
