US Treasury prices rose more than one percent in Asian trading on Tuesday, as the market recalibrated to shifting global sentiment following a long holiday weekend in the United States.
The move was not driven by a single catalyst but reflected a catch-up to events from Monday, where a sharp drop in oil prices and optimism around a potential US-Iran deal fueled a risk-on mood in global markets, according to market analysts. U.S. stock futures saw significant gains during the holiday session.
While US markets were closed for Memorial Day, S&P 500 futures gained close to 1% and Nasdaq-100 futures added over 1.3%. This rally was partly fueled by a more than 5% drop in oil prices, which eased some immediate inflation concerns. The bond market's rise on Tuesday was an adjustment to this broader flight to riskier assets.
The adjustment in Treasury prices comes as investors increasingly shift their focus from corporate earnings to macroeconomic data. The main event this week is the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, due on Thursday.
A hotter-than-expected PCE reading could quickly reverse Tuesday's gains in Treasurys and refocus markets on the possibility of interest rates remaining higher for longer. The data will be a critical test for the recent positive sentiment and could set the tone for markets heading into June.
This article is for informational purposes only and does not constitute investment advice.
