U.S. Treasury prices flight-to-safety boost knocked yields sharply lower overnight in active trading after North Korea launched a missile over Japan. Japan’s Prime Minister Shinzo Abe agreed with the U.S. administration pressure needs to be put on North Korea’s Kim Jong-Un regime. South Korea President Moon Jae-in offered a bomb dropping drill of his own.
The 10-year Treasury yield fell over 7 basis points to hit 2.084%, while the German Bund fell 6 bps to test 0.316%. Eurozone peripherals underperformed. The richening in yields saw the German two-year Schatz auction go undersubscribed. Global equities are in the red with European bourses over 1% lower and the S&P 500 future off about 0.8%. Gold is higher in typical risk-off fashion. Meanwhile, markets are grappling with the effects of the devastating floods in Houston. Data showed German GfK consumer confidence climbed to its highest level in nearly two years. Japanese unemployment fell to 2.8% while personal income rose to a 3.5% annual pace.
The June S&P Corelogic Case-Shiller home price index is due at 9 a.m. ET with the Conference Board’s August consumer confidence highlighted at 10 a.m.
Treasury will auction $25 billion four-week bills at 11:30 a.m. and $28 billion seven-year notes at 1 p.m.