Treasury yields rebounded on Tuesday as investors reacted to Monday’s sell-off in global markets.
As of 5:12 a.m. ET, the benchmark 10-year Treasury yield had risen more than 5 basis points to 3.8371%. That rise followed Monday’s decline, which marked the lowest level for the 10-year yield since June 2023. Meanwhile, the 2-year Treasury yield rose more than 7 basis points to 3.9627%. It’s important to note that yields and prices move inversely, with one basis point equaling 0.01%.
Global markets looked poised to recover from Monday’s sharp decline.
U.S. stocks began the new month lower, weighed down by fresh data that added to concerns about the economic outlook. The disappointing numbers led to fears that the Federal Reserve could delay interest rate cuts, potentially triggering a recession.
Although interest rates remained at their current levels on Wednesday, Fed Chair Jerome Powell indicated that a September rate cut remains a possibility, providing some optimism for investors.
Carsten Brzeski, global head of macroeconomics at ING Research, spoke on CNBC’s “Street Signs Europe” on Tuesday, saying, “I see this as a significant summer storm rather than the start of a fundamental shift in the real economy.”
He continued, “What we are experiencing now is more of a reality check of the market, especially with regards to AI. My hope and belief is that the situation will stabilize soon.”
Brzeski expects the Fed to cut interest rates by 50 basis points next month to shore up market confidence. “I don’t expect any emergency meetings, as the situation is not serious enough for that. However, a 50 basis point rate cut by Jerome Powell would be a strong and symbolic start to a rate-cutting cycle,” he added.