US 10-year Treasury yields consolidate biggest losses in eight months

• US 10-year Treasury yields snap four-day downtrend near the lowest levels since February.
• Chatters over US infrastructure bill help trigger the corrective pullback.
• Delta covid variant, US-China tussles and reflation fears keep bond buyers hopeful.
• US Housing data, risk catalysts will be the key drivers.

US bond bears catch a breather following the heaviest fall since November 2020 amid the Asian session on Tuesday. That said, the 10-year Treasury yields add 2.6 basis points (bps) to 1.207% by the press time.

While corrective pullback amid a light calendar could best describe the latest moves of the US bonds, updates over the US President Joe Biden’s infrastructure bill add to the profit booking moves. US Senate Majority Leader Chuck Schumer said, “Procedural vote on infrastructure bill will take place on Wednesday,” giving the much-needed relief to the markets even as he also said, “Wednesday not a deadline for every detail of the bill.”

Also positive for the market sentiment were comments from Australian Health Minister Greg Hunt who tweeted that over one million doses of Pfizer vaccine will arrive in the nation. Additionally, Aussie Epidemiologist Catherine Bennett’s statements signaling, per the ABC News, Victorian health authorities have the state's COVID-19 outbreak under control, as well as a three-day fall in Sydney’s covid cases, add to the market’s cautious optimism.

However, the US issue of a “Level 4” travel alert for the UK over covid concerns and Sino-American tussles, recently over Microsoft Exchange, keep the bears hopeful. Furthermore, the reflation woes aren’t grounded and hence the latest uptick in the US Treasury yields remains doubtful.

Not only the US Treasury yields but S&P 500 Futures and stocks in Asia-Pacific also print mild gains by the press time.

Looking forward, market players will keep their eyes on the Delta covid variant updates and inflation chatters, not to forget US-China headlines and the US housing numbers, for fresh impulse. Amid all these plays, the sentiment may remain pressured ahead of this Thursday’s ECB, not to forget the next week’s FOMC.