Bonds

Treasury yields rise amid state reopening efforts, investors pivot toward stocks

U.S. government debt yields rose Tuesday as a flurry of U.S. states moved forward with plans to reopen their economies and tensions between Washington and Beijing appeared to abate.

The yield on the benchmark 10-year Treasury note rose to 0.656% and the yield on the 30-year Treasury bond edged up to 1.322%. Bond yields rise as prices fall.

Wall Street tilted toward risk assets on Tuesday as states like California and New York signaled their intentions to reopen sections of their economies.

Sacramento said it would permit some retailers that can guarantee curbside service, as well as certain manufacturers, to reopen this week. California Gov. Gavin Newsom said clothing stores, bookstores, sporting goods stores and florists can reopen for curbside pickup as soon as Friday.

Albany, meanwhile, said it expects to begin its gradual reopening after May 15, when manufacturers, construction and select retailers will be allowed to resume operations.

Treasurys

Investors view these slow-and-steady reopenings as positive so that Americans across the country can begin to return to work and the nation's output can start to return to normal.

"Stocks are holding up exceptionally in what we can only describe as the worst earnings season in modern financial times," wrote Tom Lee, head of research at Fundstrat Global Advisors.

"The state openings and case counts peaking, and also 'earnings confessions' are all acting to reduce uncertainty," he added. "And this is, in our view, the primary reason stocks are drifting higher."

The pivot away from U.S. debt and into equities remains measured as health officials warn of possible upticks in the number of new coronavirus cases in those states that move to reopen.

Reports of incremental improvement to U.S.-China relations also appeared to encourage investors on Tuesday.

Deputy national security advisor Matthew Pottinger reiterated on Monday that the U.S. is not weighing "punitive measures" against Beijing over its handling of the coronavirus pandemic, a statement in stark contrast to the accusatory rhetoric used by Secretary of State Mike Pompeo over the weekend.

Treasury Secretary Steven Mnuchin, a top negotiator of the Phase 1 deal with China, added to Fox Business Network on Monday that he has "every reason to expect that they honor this agreement." The secretary did warn that Beijing's failure to abide by the terms of the deal would lead to "very significant consequences in the relationship."