Treasury Yields Rise, 2-Year/10-Year Curve Remains Inverted

Source: NYSE

Treasury yields rose Tuesday as Wall Street assessed better-than-expected corporate earnings reports, and wagered whether stocks have found a bottom.

The yield on the benchmark 10-year Treasury note was up at 3.008%, while the yield on the 30-year Treasury bond climbed to 3.166%. Yields move inversely to prices.

The gap between the 2-year and 10-year yields remained inverted as the market weighs the possibility that the Federal Reserve will hike interest rates by 75 basis points at its meeting on July 26 and 27 — rather than the more aggressive option of 100 basis points. The 2-year yield was last seen at 3.227%.

Yield-curve inversions — when shorter-term government bonds have higher yields than longer-term ones despite carrying lower risk — are often viewed by markets as signs that a recession is imminent.

As investors try to plot the path of inflation, economic growth and the Fed's policy trajectory, stock markets and other risk assets have remained volatile.

Still, investor sentiment has worsened to a point that some on Wall Street believe markets are set up for a relief rally ahead, according to a Bank of America survey on Tuesday.

The Dow Jones Industrial Average rallied 754 points on Tuesday, rebounding from losses in the prior session, as investors bet on strong earnings reports.

Meanwhile, U.S. housing starts fell 2% in June to a seasonally adjusted annual rate of 1.559 million units, a weaker-than-expected print.

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