“The fact that we’ve had a bit of a reversal in the Treasury market has scared some of the momentum players,” said Charlie Smith, founding partner and chief investment officer at Fort Pitt Capital Group in Pittsburgh.
German bunds led the drop in sovereign debt, with yields on longer-dated notes climbing more than shorter-dated securities, as traders pared back expectations that the European Central Bank will unveil a big stimulus package this week.
Rates on longer-dated Treasury notes climbed more than those on shorter-dated securities, reversing an inversion in the yield curve.
“Trade sentiment is driving the market movements on the margin up and down,” Aaron Clark, portfolio manager at GW&K Investment Management, said by phone.
“The commentary that we’ve heard over the past week or so, clearly markets have taken note of that and already priced some of that in.”
Elsewhere, oil advanced after Saudi Arabia’s new energy minister signaled that OPEC and its allies will continue with production cuts, as the group prepares to gather in Abu Dhabi.
Here are some key events coming up this week: OPEC’s monthly oil market report, which includes demand forecasts and production estimates, is due Wednesday.The ECB policy meeting Thursday is widely expected to see a cut to interest rates and a review of all options, including QE.