Bonds Head Out Higher as Stocks Slip

U.S. Treasuries corrected Monday, regaining some ground early as month-end buyers stepped in and stocks slid, then settled into quiet, low-volume range trade. The 10-year outperformed while the 30- and two-year wings lagged with little on the calendar to goose trade. The market was looking out to a run of data and Federal Reserve speakers in the remainder of the week with the big employment report Friday.

The 30-year closed near 2.98% from a low yield/high price at 2.973% overnight and 3.0165% close Friday. The 10-year went out near 2.32% from a 2.313% high and 2.367% close. The five-year settled near 1.80% from a run at 1.79% overnight and 1.845% Friday. The two-year closed near 1.111% from a midday 1.0989% and 1.13%.

The curve trade went out mixed with the yield differential between the two- and 10-years narrowed to 1.21 from a 1.23 plus close while the five- and 30-year yield spread steepened to 1.18 from a tighter 1.17.

The November Dallas Fed manufacturing index jumped to 10.2 versus an expected 2.0 from -1.5 in October, seeing the return to expansionary territory since late 2014 and hitting the highest since July of 2014.

Tuesday’s calendar offers the preliminary Q3 gross domestic product (GDP) at 8:30 a.m. ET, the September S&P Case-Shiller home price index at 9 a.m., the Conference Board’s November consumer confidence at 10 a.m.

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