Investors worry that escalated interest rates could commence to slowly taking up the major share into corporate profits and indicate that more inflation is on its way.
"Over the past two months European Central Bank rate hike expectations have corrected lower and [EUROZONE] rates have retreated significantly from their February highs", said Norbert Aul, a strategist at UBS, who noted that "confidence in an ever-stronger growth momentum has been dented", resulting in euro yields finding "a floor". After peaking just below 3.0% yesterday, 10-year Treasuries are now yielding 2.965%.
Bond yields in the eurozone and United Kingdom were also higher on Monday but 10-year gilt and Bund benchmarks remain below their peaks for the year. An index of USA consumer attitudes increased to 128.7 this month, up from a print of 127 in March, notching its highest read since February's multiyear record, according to the Conference Board. "Once the dust settles, do we hold above that level and continue to head higher in rates, or does the market hold in?"
"We're not anxious when USA yields go up on the back of stronger growth, but on the back of stronger inflation, that's a whole different story", Mr. Biggs said.
A rising dollar makes greenback-issued bonds more expensive for issuers in other currencies, but most commodities are also denominated in the USA currency. This report is very important because it will influence the direction of Treasury yields. The U.S. Dollar Index was roughly flat after a five-day rally Tuesday, leaving it near its highest level in more than three months.
Gold prices also came under downward pressure from an improvement in the geopolitical environment, with the U.S. Treasury Secretary cautiously optimistic on his negotiations with China, North Korea freezing its nuclear testing, and Washington extending its deadline for sanctions against Russia's Rusal, said OCBC analyst Barnabas Gan.
BONDS: Bond yields slipped again. So it's no foregone conclusion that the 10-year yield will rip through 3 percent. Increased supply weighs on bond prices and yields move inversely to those prices.
The most widely watched bond rate in the world just hit a milestone. But the prospect of a deluge of new government debt has weighed on the $14.9 trillion Treasuries market. "Bond King" Jeff Gundlach has warned that should the 10-year yield surpass 3%-which it has yet to do-stocks could close lower at the end of 2018.
But that doesn't mean there is no risk that yields rise further.
"The supply of Treasurys is on the rise, following Trump's tax cut".
"Yesterday was a big day in terms of treasury yields impacting currencies". At the same time, the Fed is trimming its balance sheet, meaning the amount of net new debt ispoised to surgein the years ahead.