US yields climb to 4-week peaks as risk appetite improves

NEW YORK: US Treasury yields rose to four-week highs on Tuesday, bolstered by increased risk appetite that has pushed Wall Street shares higher, as well as expectations of more positive U.S. and Chinese economic data this week.

In a week shortened by the Good Friday holiday, investors are awaiting U.S. retail sales data on Thursday, which could show that the economy is far more stable than expected, analysts said.

At the same time, major Chinese data due late on Tuesday - gross domestic product, retail sales, among others - could provide some insight into how the world's second-largest economy has been performing.

After a sluggish start to the year, Chinese numbers have been more upbeat than expected as monetary authorities increased stimulus measures. That has eased concerns about a China economic slowdown.

"There's the thought that with China's stimulus, people are going to focus more on Chinese retail sales and the bigger numbers that we get out of China this evening and without momentum in Treasuries right now, it's possible that that's bringing some insurance selling in Treasuries that you wouldn't necessarily anticipate," said Jim Vogel, interest rates strategist, at FTN Financial in Memphis, Tennessee.

He added that this expectation of China drew even more focus on U.S. retail sales data. "Today's moves are what you would expect if retail sales numbers are above expectations," Vogel said.

U.S. retail sales for March are expected to rise 0.9%, following a 0.2% decline in the previous month, according to a Reuters poll of analysts.

In afternoon trading, U.S. 10-year note yields rose to 2.590%, up from 2.553% late on Monday. Ten-year yields hit a four-week peak of 2.596%.

"We kind of moved into this range of 2.40-2.60 percent range in the 10-year. It seems hard for me to believe that the 10-year could get a lot lower," said Jerry Paul, senior vice president and fixed income portfolio manager at ICON Advisers in Denver.

"I will be cautious with any 10-year exposure until we get into the high twos in yield," he added.

Yields on U.S. 30-year bonds were also higher, at 2.991% , up from 2.963% on Monday. Thirty-year yields also touched a four-week high of 2.998%.

On the short end of the curve, U.S. 2-year yields advanced to 2.41%, compared with Monday's 2.392%. The note's yield hit a four-week peak as well of 2.412 percent.

U.S. yields, however, dipped after data showed U.S. manufacturing output was unchanged in March after two straight monthly declines, leading to the largest quarterly decrease in production since 2017.