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U.S. Treasury yields slipped lower in early Friday trade, on track to cap a listless week of trading as investors saw signs of growing confidence among businesses in the eurozone in particular.
What are Treasurys doing?
The 10-year Treasury note yield
BX:TMUBMUSD10Y
at 1.541%, down 1.3 basis points. The 2-year note rate
BX:TMUBMUSD02Y
was down 0.6 basis point to 0.145%, while the 30-year bond yield
BX:TMUBMUSD30Y
fell 1.7 basis points to 2.223%.
What’s driving Treasurys?
The flash reading of the IHS Markit eurozone composite purchasing managers index rose to a nine-month high of 53.7 in April from 53.2 in March. Any number above 50 represents an expansion in economic activity.
This comes as the growing pace of vaccinations in Germany and France were bolstering hopes that the eurozone, a laggard in the global economic recovery, could start reopening its economy. Such budding expectations have weighed on the values of eurozone government debt, narrowing the gap between U.S. and German debt yields.
See: Gap between German bond yields and U.S. Treasuries narrows as EU vaccine rollout speeds up
In the U.S., Markit will also release its purchasing managers indexes for the U.S. manufacturing and services sectors at 9:45 a.m. ET. New U.S. home sales for March are due at 10 a.m.
What did market participants say?
“The picture is improving for the eurozone economy. While GDP figures for Q1 are likely to seal the deal on the second technical recession during this pandemic for the eurozone, it does look more and more like a strong rebound is in the making,” said Bert Colijn, senior economist at ING.
