2022.05.0919:16:00UTC+00Treasuries Recover From Initial Weakness Amid Extended Sell-Off On Wall Street

After moving to the downside early in the session, treasuries showed a notable turnaround over the course of the trading day on Monday.

Bond prices climbed well off their initial lows and into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.4 basis points to 3.079 percent.

The rebound by treasuries may partly have reflected profit taking after the ten-year yield reached its highest intraday level since November 2018.

Treasuries may also have benefited from their appeal as a safe haven amid continued weakness on Wall Street, with the Nasdaq and the S&P 500 slumping to their lowest intraday levels in over a year.

Significant weakness in overseas markets carried over onto Wall Street amid concerns about the outlook for the global economy.

Traders seem worried aggressive moves by global central banks to contain inflation could lead to a period of stagflation or an outright recession.

The extended sell-off on Wall Street also came as traders looked ahead to the release of key inflation data in the coming days.

The latest snapshot of inflation could impact expectations regarding how aggressively the Federal Reserve plans to raise interest rates.

Amid a quiet day on the U.S. economic front, trading on Tuesday may be impacted by reaction to comments by several Fed officials.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $45 billion worth of three-year notes.