The yield on the 10-year US Treasury note retreated toward 4.2% after hitting a 15-year high of 4.342% on August 21st, triggering a sharp rebound for government bonds worldwide as credit markets continued to assess the policy outlook for the Federal Reserve and gauge the impact that higher bond supply may have on their bidding levels. Cooler-than-expected PMI figures engaged bond buyers in the market to take further advantage of the recent slump in Treasury securities, reflecting bets that fears of a slowing US economy will force the Fed to ease its hawkishness. Still, other data releases countered slowdown fears, as strong retail sales underscored the resilience of the US consumer while robust industrial growth and a relatively tight labor market suggested the US central bank may still have more room to tighten monetary policy. Additionally, risks remain for bond prices in the secondary market due to concerns about higher long-dated debt issuance from the Treasury this month.
