Treasury bond prices rose and yields fell as investors plunged into the safety of Treasuries amid a global financial sell-off. The move pushed the 10-year government bond yield back to 1.31%.
At 9:00 a.m. ET, the benchmark 10-year government bond yield fell 5 basis points to 1.318% and the 30-year government bond yield fell nearly 6 basis points to 1.851%. The returns move inversely to the prices.
China’s second largest real estate developer, Evergrande, is on the brink of default and is sending shock waves across the markets as some analysts warn that the pain that could arise from the collapse would extend beyond China.
“We by no means expect an Evergrande contagion to trigger similar dynamics in the current episode, but the feedback loop between stock size, financial condition, monetary policy and US interest rates should be highlighted as the collective fear of the market becomes more pronounced. “said Ian Lyngen of BMO Capital Markets.
The data calendar is quite thin on Monday. The National Association of Home Builders poll will be released at 10 a.m. ET.
Meanwhile, US Treasury Secretary Janet Yellen called on Congress on Sunday to raise the national debt ceiling. In an opinion piece with the Wall Street Journal, Yellen said a failure to raise the debt ceiling could spark a historic financial crisis.
In addition, investors look forward to a new Federal Reserve meeting with Chairman Jerome Powell speaking on Wednesday.
Powell previously said the central bank could begin lifting monetary stimulus before the end of the year and investors will be looking for clues about the tapering process.
– CNBC’s Yun Li contributed to the coverage
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