10-Year T-Note Futures Market News and Commentary
Sep 10-year T-notes this morning are down -5.5 ticks and the 10-year T-note yield is up +2.2 bp to 2.012%. T-note prices fell back this morning as trade optimism boosted stocks and reduced safe-haven demand for T-notes. U.S. Treasury Secretary Mnuchin told CNBC in an interview today that negotiators were "about 90% of the way" to a trade deal with China before talks broke down and that he was "hopeful" that a trade deal between the U.S. and China can be found. Also, a report said the U.S. is willing to suspend the next round of tariffs on an additional $300 billion of Chinese imports while the U.S. and China prepare to resume trade negotiations. T-notes maintained their losses after today's data showed May core capital goods orders, a proxy for capital spending, rose +0.4%, stronger than expectations of +0.1%. Finally, supply pressures are weighing on T-note prices as the Treasury continues this week's $131 billion T-note package by selling $41 billion of 5-year T-notes and an $18 billion of 2-year floating-rate notes today. T-notes still have underlying support from simmering U.S./Iran tensions and last week's dovish turn by the Fed and market expectations for nearly three rate cuts in 2019. The market is discounting the odds at 100% for a 25 bp rate cut at the next FOMC meeting on July 30-31. Inflation expectations are higher today as the 10-year T-note breakeven inflation expectations rate is up +1.9 bp to 1.695%, moderately above last Monday's 2-3/4 year low of 1.612%.