US Treasurys are under pressure after the outcome of the French election sparked a flight out of safety and into risk.
Centrist Emmanuel Macron and far-right National Front candidate Marine Le Pen advanced to the second round of the presidential election in France, garnering 23.9% and 21.4% of the vote, respectively. While the results fall pretty much in line with the expected outcome, safe-havens, like Treasurys, are being dumped amid a relief rally in risk assets.
Early selling has yields up more than 6 basis points across most of the curve. Here’s a look at the scoreboard as of 7:49 a.m. ET:
- 2-year +6.6 bps @ 1.246%
- 3-year +6.2 bps @ 1.462%
- 5-year +6.8 bps @ 1.838%
- 7-year +6.6 bps @ 2.122%
- 10-year +5.7 bps @ 2.305%
- 30-year +5 bps @ 2.952%
Monday’s selling has run the 10-year yield back above 2.30% for the first time in two weeks. Last week, the yield broke below 2.20% for the first time since the week following President Donald Trump’s election victory.
The benchmark yield hit a high of 2.64% amid speculation Trump’s plans to cut taxes and roll back regulations would bring back inflation to the United States. However, yields have pressed lower in recent weeks as Trump’s inability to repeal and replace Obamacare has called into question his plans for taxes and regulations.
A slightly flatter yield curve is in the works with the 5-30-year spread tighter by about 2 bps near 111.4 bps. The curve ended last week near its widest level since the end of February.