U.S. government prices are bouncing back after the yield on the benchmark 10-year note hit as high as 2.614% following the release of positive economic data from China in the overnight. Chinese GDP came in above estimates at +6.4% Y/Y with retail sales accelerating 50 bps to +8.7% Y/Y and industrial output accelerating +280 bps to +8.5% Y/Y (vs. +5.0% est), which is the fastest pace of growth since 2014. The data continues to support the expectation of Chinese growth to have bottomed in Q1, transitioning into more sustained acceleration. Yields have risen higher with stocks nearing all-time highs coupled with Fed optimism on growth and more tolerant expectations of inflation. The latest FOMC beige book is set to be released later this afternoon. The yield on the 10-year note remains bearish trend with the current range seen between 2.44 – 2.61%. The next downside target in June bonds is seen around 145-25 with near term resistance around 146-27.
30-Yr T Bond Jun ’19 Daily Chart