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The 10-year Treasury yield fell to its lowest level since February on Tuesday amid signs that the economic recovery from the pandemic could be slowing.

While economic growth boomed in the first half of 2021 and is set to keep expanding rapidly the rest of the year, investors digested signals that much of the comeback has already occurred.

The latest numbers showed growth in the service sector of the economy slowed by more than expected in June from a record level the prior month. This follows a tick-up in the unemployment rate on Friday.

The yield on the benchmark 10-year Treasury note fell 7.2 basis points to 1.36% at 4:00 p.m. ET. The note reached hit a low of 1.351% at one point, its lowest level since Feb. 24 when it yielded as low as 1.330%. The yield on the 30-year Treasury bond was 6.4 basis points lower at 1.986%. Yields move inversely to prices. One basis point is 0.01%.

 

Dollar edges higher as market awaits clues from U.S. Fed

The dollar gained against a basket of peer currencies on Tuesday following the U.S. Independence Day long weekend as traders positioned themselves ahead of the release of the minutes from the U.S. Federal Reserve’s pivotal June meeting.

Market participants will be looking for clues as to when the Fed will begin to taper its pandemic-induced bond-buying spree amid a recovering economy, when minutes of the June meeting are published on Wednesday.

At 3 p.m. Eastern time, the dollar index was up 0.328% at 92.550.

The greenback’s move came even as U.S. Treasury yields fell after data signaled that growth in the service sector had slowed, with the benchmark 10-year note on track for its longest streak of declines in 16 months.

Disappointing data out of Europe sent the euro towards a three-month low against the dollar.

The data dented the euro, which was down 0.37% at $1.18235 against the greenback. It fell to an early April low of $1.1807 last week.

 

European Central Bank policymakers are in the middle of debating a new strategy, with many now backing the notion of letting inflation surpass 2% for a while after it lagged below that level for most of the past decade.

Sterling was down 0.34% against the dollar at $1.38005 after having hit a one-week high of $1.3888, with markets looking forward to England becoming the first major country to formally start living with the coronavirus by dropping COVID-related curbs in two weeks’ time.