US 10-year Treasury yield hit 6-week low in Asia

The 10-year Treasury yield fell to a 6 - week low of 2.88 percent in Asia.
Italian uncertainty and the drop in oil prices seems to have put a bid under treasury prices.

Omkar Godbole FXStreet Contributor

The yield on the 10-year benchmark US Treasury note fell to 2.88 percent in Asia, its lowest level since April 19, possibly in response to Italian uncertainty and a drop in oil prices.

Italian 10-year government bond yields, which move inversely to price, jumped 22 basis points to a 3.5-year high of 2.67 percent yesterday on fears Italy's anti-EU parties will likely get a much stronger mandate in fresh elections.

Meanwhile, the 10-year Italy-German yield spread rose to 232 basis points - the highest level since December 2013.

Meanwhile, the pullback in oil prices may have also played a role in pushing the treasury yield down to multi-week lows. West Texas Intermediate (WTI) stood at $72.06 a barrel on May 21 but had declined to $67.88 by the end of trading on May 25. As of writing, WTI is changing hands at $66.78/barrel.

Falling oil prices tend to weigh over inflation expectations and therefore also end up pushing the treasury yields lower.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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