Bond Prices Slide as Stocks Head Higher – 10-Year 2.945%

US Treasury prices slid early Tuesday, inching yields higher, along with Japanese government bonds (JGB) and core Europeans, as global equities rallied. The front end of the Treasury curve was under-performing slightly ahead of Tuesday’s $34 billion three-year Treasury auction.

The two-year yield was up 0.8 basis point near 2.657%, with the 10-year rate up 0.6 bp to 2.945%. Weakness in JGBs, with the rate up 0.9 bp to 0.102%, provided the initial bearish momentum. Subsequently, the German Bund yield edged up 0.8 bp to 0.394%, while the UK Gilt rate was 0.6 bp higher at 1.308%. Meanwhile, the Australian 10-year rate plunged 6.9 bps to 2.65% after the Reserve Bank left rates unchanged but cut its inflation forecast.

Stocks climbed as earnings topped trade angst. China’s CSI 300 rallied 2.9%, with the Nikkei up 0.69%, even as the yen firmed after another story about the Bank of Japan considering hiking rates this year. The DAX climbed 0.9%, with the FTSE up 0.84%, while US futures were pointing to a firmer open. Italy’s MIB gained over 1% as political jitters eased. In overnight data, German industrial production dropped 0.9% in June. In Japan, June income improved to -1.2% year-over-year from -3.9% y/y.

Tuesday’s calendar remains light with the June Job Openings and Labor Turnover Survey due at 10 am ET and June consumer credit at 3 pm.

Treasury auctions $70 billion in four-week bills at 11:30 am with the results from the three-year sale out at 1 pm.