Treasury Yields Spike After Pair of Weak US Sales: Markets Wrap

(Bloomberg) — Treasuries fell and stocks wavered after a pair of weak US bond sales, with traders also weighing mixed economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates.

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Bonds extended losses after the US sold $70 billion of five-year notes at 4.553% — above the pre-auction level of 4.540%. An earlier offering of $69 billion in two-year notes also came on the soft side. Just a few days before the Fed’s favorite price gauge, a report showed US consumer confidence unexpectedly rose in May — though recession expectations increased as well.

“Treasury yields are rising to the high of the day after the 5-year auction was poor,” said Peter Boockvar at The Boock Report. “This follows the 2-year auction earlier today that was mediocre — and will be followed by a 7-year tomorrow.”

US 10-year yields advanced seven basis points to 4.53%. The S&P 500 hovered near 5,300. The Nasdaq 100 headed toward a fresh record as Nvidia Corp. rallied after the Information reported that Elon Musk has indicated that its artificial intelligence startup xAI — which has raised $6 billion — will use the chipmaker’s H100 graphics processing units.

“It may be short week, but it looks to be a busy one,” said Chris Larkin at E*Trade from Morgan Stanley. “With last week’s FOMC minutes sounding a hawkish tone, traders will be eager to see cool data that could make it easier for the Fed to cut rates.”

As Wall Street returned from the holiday weekend, the “T+1” rule came into effect — making US equities settle in one day rather than two. Investors also waded through remarks from Fed Bank of Minneapolis President Neel Kashkari, who said the policy stance is restrictive, but officials haven’t entirely ruled out additional rate hikes.

Bitcoin fell as traders monitored transfers by wallets belonging to the failed Mt. Gox exchange. Oil advanced as tensions flared in the Middle East.

Corporate Highlights:

• T-Mobile US Inc., the second-largest mobile carrier in the US, has agreed to buy US Cellular Corp.’s wireless operations and some of its spectrum assets for about $2.4 billion.

• Apple Inc.’s iPhone staged a rebound in China last month with shipments rising 52% amid a flurry of discounts from retail partners.

• Activist investor Elliott Investment Management has invested more than $2.5 billion in Texas Instruments Inc. and is pushing the chipmaker to improve its free cash flow.

• GameStop Corp. rallied after the video-game retailer said it brought in nearly $1 billion from a share sale program amid renewed interest for the so-called meme stock.

• DraftKings Inc. and FanDuel-owner Flutter Entertainment Plc fell after the Illinois Senate passed legislation that would raise taxes on sports betting.

Story continues

Key events this week:

• Germany CPI, Wednesday

• Fed’s Beige Book, Wednesday

• Fed’s John Williams speaks, Wednesday

• Eurozone economic confidence, unemployment, consumer confidence, Thursday

• US initial jobless claims, GDP, wholesale inventories, Thursday

• Fed’s John Williams and Lorie Logan speak, Thursday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• China official manufacturing and non-manufacturing PMI, Friday

• Eurozone CPI, Friday

• US consumer income, spending, PCE deflator, Friday

• Fed’s Raphael Bostic speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 1:33 p.m. New York time

• The Nasdaq 100 rose 0.3%

• The Dow Jones Industrial Average fell 0.6%

• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.0871

• The British pound was little changed at $1.2770

• The Japanese yen fell 0.1% to 157.08 per dollar

Cryptocurrencies

• Bitcoin fell 2.4% to $67,894.76

• Ether fell 1.4% to $3,836.24

Bonds

• The yield on 10-year Treasuries advanced seven basis points to 4.53%

• Germany’s 10-year yield advanced five basis points to 2.59%

• Britain’s 10-year yield advanced two basis points to 4.28%

Commodities

• West Texas Intermediate crude rose 2.6% to $79.72 a barrel

• Spot gold rose 0.2% to $2,356.09 an ounce

This story was produced with the assistance of Bloomberg Automation.

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