WASHINGTON- US Treasury yields drifted higher on Tuesday, rebounding after the yield on two-year notes hit five-month lows earlier, as risk-off sentiment eased in global markets a day after a Wall Street selloff.
The two-year Treasury yield was little changed at 3.891 percent, after hitting 3.83 percent during Asian hours its weakest level since October 4.
The benchmark 10-year yields were up 3.2 bps at 4.244 percent holding above a near 4-1/2-month low hit last week.
On Monday, two-year yields fell around 10 basis points in their biggest daily drop since September after US President Donald Trump declined to rule out a recession as a result of his tariff policies.
Wall Street stocks were lower on Tuesday, but declines were smaller compared with Monday’s sellfoff in a sign that sentiment was somewhat recovering.
“It’s challenging to decipher Trump’s policy and its impact on the Treasury market,” said Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors.
Maxia is neutral on Treasuries, but said his view could change “if we have strong evidence of a significant weakening of the US economy. We have just seen some alarm bells as of now.”
