The Treasury curve bear steepened overnight on global supply pressures (Australian and U.K. issuance), and the trend is continuing this morning on solid U.S. economic data. The 10-year yield is up to 3.05% (highest since 2011), and the 2-year/10-year spread is 3 bps wider to 0.48%. Global equity markets are mixed today, and S&P 500 futures are currently down 15 points. Unresolved trade tensions with China are being blamed for the weakness in U.S. and European stocks this morning, but it’s more likely attributable to today’s rise in long-end yields (nothing new on the trade front from a headline perspective).
The April retail sales report was largely in line with expectations, with the headline growth rate up 0.3%, and the control group (used in GDP calculation) rose 0.4% versus the prior month. Another positive from the April report was the upward revisions to the March data, including a 0.5% growth rate (up from 0.4%) for control group sales.
Managing Director, Investment Management Group