Treasury yields declined on Tuesday ahead of key employment data releases as traders monitored the relationship between short and long-term bonds.
The yield on the 5-year Treasury note retreated more than 5 basis points to 2.51% shortly after 9:00 a.m. ET, while the yield on the 30-year Treasury bond was down about basis points to 2.517%. The yield on the benchmark 10-year Treasury note dropped nearly 7 basis points to 2.407%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The 5-year and 30-year rates inverted on Monday morning for the first time since 2006, with more purchases of the longer-dated Treasurys than the shorter-dated government bonds.
This inversion of the yield curve has in the past happened prior to recessions, as more purchases of long-dated Treasurys indicate investor concern about the health of the economy.
However, the main spread that traders watch, between 2-year and 10-year Treasurys, remain positive for now.
Soaring inflation, driven higher by the Russia-Ukraine war, has sparked concerns about a slowdown in economic growth. Officials from Russia and Ukraine are set to resume face-to-face negotiations in Turkey on Tuesday.
A Russian defense officials said Tuesday the country would “drastically” decrease military action around UKraine, which appeared to help trader sentiment.
Federal Reserve Chairman Jerome Powell said last week that the U.S. central bank could become more aggressive with hiking interest rates in an effort to get inflation under control.
Jobs data is one factor used by the Fed to help determine its monetary policy plans. February’s Job Openings and Labor Turnover Survey is due out at 10 a.m. ET on Tuesday.
The March ADP Employment Change report is then set to be released on Wednesday, followed by weekly jobless claims data on Thursday. The closely watched March nonfarm payrolls report is then due out on Friday, with economists expecting to see 460,000 jobs added in March and the unemployment rate to fall to 3.7%, according to Dow Jones estimates.
House prices rose more than 19% year-over-year in January, according to Tuesday’s S&P CoreLogic Case-Shiller Index. The March CB consumer confidence index is then slated for release at 10 a.m. ET.
An auction is scheduled to be held on Tuesday for $47 billion of 7-year bills.
— CNBC’s Samantha Subin contributed to this market report.