U.S. government debt yields fell Tuesday thanks to Asian interest in long-term notes and bonds and ahead of Friday's first look at U.S. economic output. Treasury supply and auctions also remained in focus.
At around 10:27 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.567%, while the yield on the 30-year Treasury bond was also lower at 2.97%.
The drift lower in yields comes amid reports of Japanese real money buying on the long-end of the Treasury curve. Japanese insurers were the main buyers overnight, in-line with typical seasonal trends, according to Seaport Global Holdings rates strategist Tom DiGaloma.
"The broader global economic realities have arguably made 3.0% [on 30-year bonds] and 2.60% [on 10-year notes] attractive on an outright basis," wrote Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets. "While Monday's price action was muted, any significant retracement from relatively lofty levels in domestic equities will be a renewed bullish underpinning for a Treasury market that has already sold off 25 bp from the late-March low-yield marks."
Energy equities have dominated market focus this week after oil prices jumped more than 2% on Monday, hitting their highest level this year amid intensifying concern about global supply. That angst was fueled after the U.S. announced a further clampdown on Iran's oil exports.
The world's largest economy said from May 1, it would eliminate all waivers allowing eight economies to buy Iranian oil without facing U.S. sanctions.
The Federal Reserve Board will hold an open meeting Tuesday to discuss a proposal that would simplify and increase the transparency of its rules of determining control of a banking organization. Meanwhile, White House economic advisor Larry Kudlow is scheduled to comment on the U.S. economy and recent market volatility at a National Press Club event.
The U.S. Treasury is set to auction $26 billion in 52-week bills and $40 billion in two-year notes on Tuesday.