US 10-year Treasury yields consolidate losses after the lowest daily close since February

• US 10-year Treasury yields snap two-day downtrend near July lows.
• Yields closed near multi-day low after US ISM data, CDC comments amplified Delta covid variant concerns.
• The world’s largest pension fund’s cut of US bond weight adds to the T-bond yields’ weakness.
• US infrastructure spending talks, IMF’s historical additional to SDR defend bond bears.

After a dismal start to the week, market sentiment improves during Tuesday’s Asian session. While portraying the mood, the US 10-year Treasury yields add 1.8 basis points (bps) to flash the 1.18% coupon rate by the press time.

The risk barometer slumped to the lowest since July 20, also printing the lowest daily closing since February, the previous day amid escalating virus woes and downbeat US data.

Downbeat activity numbers from the world’s top two economies, namely the US and China, raised questions over the recovery moves from the pandemic. Beijing’s official gauge marked the slowest expansion in 17 months, followed by downbeat Caixin Manufacturing PMI, whereas the US ISM Manufacturing PMI eased to 59.5, versus 60.9 forecast and 60.6 prior readouts, during the stated period.

Further, the US Centers for Disease Control and Prevention (CDC) highlighted the Delta variant of the virus as “likely more severe” than earlier versions, per an internal report, made public on Friday, said Reuters. On the same line, the reintroduction of the local lockdowns in China and Aussie hardships due to the COVID-19 strain also amplifies the virus woes.

Alternatively, US Senators are hopeful of getting the much-awaited stimulus passed during this week. Further, the International Monetary Fund (IMF) announced the historical allocation of $650 billion to its Special Drawing Rights (SDRs) during late Monday.

Amid these plays, S&P 500 Futures rise 0.25% after a downbeat start to the week on Wall Street whereas Asian stocks trade mixed by the press time.

Looking forward, market players will keep their eyes on the virus updates and news from the US Senate for fresh impulse amid a light calendar. However, pre-NFP caution could limit the volatility.

Read: Forex Today: Dollar weak ahead of first-tier events