U.S. government debt prices were lower Tuesday morning, as market participants monitored a fresh batch of economic data and Treasury auctions.
At around 02:55 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.1448%, while the yield on the 30-year Treasury bond was also higher at around 2.6273%.
Market participants have been increasingly concerned that the bond market is indicating a deteriorating economic outlook in recent weeks.
However, U.S. Treasury Secretary Steven Mnuchin disputed that interpretation in an interview with CNBC on Monday.
Mnuchin said falling bond yields, rather than warning of a recession, should be viewed as a sign that the Federal Reserve would cut interest rates over the coming months.
Bond yields fell to 20-month lows last week after government data showed U.S. job creation slowed more than expected in May.
Investor expectations of a June rate cut from the Fed rose last week to 27.5%, according to the CME Group’s FedWatch tool. The market gives a 79% chance of a Fed rate cut in July.
The 10-year yield stretched an overnight spike to hit an 11-day spike of 2.157%. It followed a boost in market sentiment after a deal between the U.S. and Mexico to avoid tariffs eased investor concerns.
On the data front, the National Federation of Independent Business (NFIB) index for May is expected at around 6:00 a.m. ET. The latest producer price index (PPI) and core PPI excluding food and energy figures will be released slightly later in the session.
Meanwhile, the U.S. Treasury is set to auction $38 billion in 3-year notes on Tuesday.
— CNBC’s Michael Sheetz contributed to this report.