US Treasury yields bounce off February lows as coronavirus concerns mount

  • US Treasury yields rebound from a five-month low, snap three-day downtrend.
  • Covid strains seem to spread faster in the West, Asia-Pacific keeps struggling with the virus.
  • Vaccine news offers little solace amid a quiet session.

The coronavirus (COVID-19) woes favor the US Treasury yield rebound as the traders seek fewer clues of the Fed’s next moves in recent days.

That said, the 10-year Treasury yield regains 1.31%, up 2.6 basis points (bps) while the 30-year counterpart jumps back from early February levels to 1.94%, adding three bps by the press time.

Although Aussie Prime Minister Scott Morrison changed his stance over the AstraZeneca vaccine, also pushed people to take early jabs of Pfizer, Australia’s covid infections jumped to three days high on July 08. On the other hand, UK refreshed the six-month high of the virus cases, unfortunately, whereas the numbers as grim for Indonesia, South Korea and Thailand.

The virus woes pose serious challenges to the economic recovery hopes and do favor the need for further easy money policies. However, traders seemed to have been less interested in the central bank chatters of late. Recently, the ECB showed readiness to alter inflation targets whereas the polls suggesting BOC hint at the early taper and those concerning the RBNZ hint rate hikes in late 2021.

It’s worth mentioning that the recent weakness in the US Jobless Claims and fears of the virus variant to test the off-pandemic scenario also underpin the US Treasury yields. As per the latest study, over 50% of covid infections registered in the last two weeks inside the US are of the coronavirus strains.

The grim reality of the variant’s resistance to the vaccines and ability to spread faster add to the market’s fears of such developments and favor the US Treasury yields. The same weigh on the gold prices while offering the US dollar index (DXY) a helping hand, up 0.05% by the press time.

Read: The yield curve continues to flatten

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