- US stocks recovered from a two-day slump as corporate earnings and economic data beat expectations. Treasuries pared losses as traders priced in additional Federal Reserve rate hikes.
- The 10-year Treasury yield surpassed 2.80% before falling to 2.70% later in the day as investors adjusted their expectations for the Fed's rate-hike path. Recent data also alleviated fears of a broader economic slowdown, as growth in the US services sector unexpectedly increased to a three-month high in July.
- Treasuries rose last week after Fed Chair Jerome Powell signalled that the pace of future increases may slow later this year, raising the prospect of market-implied cuts next year. However, several Fed officials have stated that the central bank is far from done tightening and is intent on tamping down price gains that are the fastest in four decades.
- Markets are also somewhat calmer as tensions between the United States and China simmered after House Speaker Nancy Pelosi left Taiwan. China had reacted angrily to her visit, and markets were tense ahead of her arrival on Tuesday.
