Core Viewpoint - The rising yields on U.S. Treasury bonds may attract buyers, but upcoming bond auctions will be closely monitored due to concerns over U.S. fiscal issues [1] Group 1 - The 30-year, 10-year, and 2-year U.S. Treasury yields are currently around 5%, 4.5%, and 4.0% respectively, which are seen as attractive levels for low-end buyers [1] - Recent weeks have shown that these yield levels have been appealing to certain investors [1] - Despite the attractive yields, investors are adopting a cautious stance ahead of the U.S. Treasury bond auction this week due to ongoing fiscal concerns [1]

Group 1 - The U.S. Treasury will auction $22 billion in 30-year bonds this Thursday, which has become a focal point for Wall Street due to increasing global investor resistance to long-term government debt [1] - The 30-year U.S. Treasury bond has become the least favored bond type, with its yield reaching a nearly 20-year high of 5.15% last month and hovering around 4.98% at the start of the week [3] - Demand for long-term bonds has been persistently weak, with rising yields prompting investors to seek higher risk premiums for government loans, leading to increased financing pressure as U.S. borrowing continues to rise [4] Group 2 - Concerns over the fiscal situation have intensified, with predictions that recent tax and spending legislation could increase the U.S. budget deficit by trillions in the coming years, and Moody's has downgraded the U.S. sovereign credit rating from Aaa to Aa1 [5] - The total U.S. federal debt has surpassed $36 trillion, accounting for 124% of GDP, with interest payments projected to exceed $1 trillion for the fiscal year 2024 [5] - Due to severe sell-offs, there are speculations that the U.S. Treasury may reduce or suspend the issuance of 30-year bonds, as the current trading situation for long-term U.S. Treasuries no longer aligns with the traditional view of them as "risk-free assets" [5]

Core Viewpoint - The auction of $69 billion 2-year U.S. Treasury bonds showed a stable demand, with the yield slightly lower than pre-auction trading levels, indicating continued interest in short-term debt instruments [1] Group 1: Auction Results - The yield on the 2-year Treasury bonds was one basis point lower than the pre-auction trading level, and approximately two basis points lower than last Friday's closing price [1] - The allocation to primary dealers was 10.5%, below the recent average of 10.9%, indicating a lower participation from these dealers [1] - Direct bidders received 26.2% of the allocation, significantly higher than the recent average of 16.4%, suggesting strong interest from non-dealer participants [1] - Indirect bidders accounted for 63.3% of the allocation, slightly below the recent average of 72.7%, indicating a moderate level of interest from this group [1] - The bid-to-cover ratio was 2.57, close to the past six auction average of 2.65 and higher than the 2.52 from the April auction, reflecting solid demand [1] Group 2: Future Outlook - Upcoming Treasury auctions for 5-year and 7-year bonds are expected to benefit from potential end-of-month demand, indicating a positive outlook for short-term debt instruments [1]

Core Viewpoint - Moody's downgraded the U.S. sovereign credit rating from Aa3 to Aa1 due to increasing government debt and interest payment ratios, marking a significant warning signal for the financial markets [1][8]. Group 1: Impact on Financial Markets - Following Moody's downgrade, U.S. stock ETFs tracking the S&P 500 index fell by 1%, while the Nasdaq 100 ETF (QQQ) dropped by 1.3% in after-hours trading [4]. - The yield on the 10-year U.S. Treasury bond surged, approaching 4.5%, while the two-year Treasury yield reached a daily high of 4.006%, marking an increase of 1.17% [4]. Group 2: Factors Influencing U.S. Treasury Yields - The recent decline in U.S. Treasury prices is attributed to three main factors: 1. Adjustments in monetary policy expectations, with a shift towards a wait-and-see approach among Federal Reserve officials despite a slowdown in inflation [10]. 2. Increasing imbalance in supply and demand for U.S. Treasuries, with high issuance levels and upcoming debt repayment peaks [10]. 3. Growing concerns regarding the U.S. government's debt repayment capacity, exacerbated by rising federal debt levels and potential tax cuts [10][11]. Group 3: U.S. Debt Situation - The average daily increase in U.S. federal debt over the past year was $442 million, equating to approximately $5,121 per second, with over 30% of U.S. debt facing maturity and refinancing pressures within a year [11]. - The current public debt-to-GDP ratio stands at 97.8%, projected to reach a historical high of 107.2% by 2029, raising concerns among overseas investors about the sustainability of U.S. debt [11].

Group 1 - The S&P 500 and Nasdaq have recovered from the declines following the U.S. tariff announcement on April 2, with investors focusing on the upcoming Federal Reserve decision [1] - The probability of the Federal Reserve maintaining the current interest rate range of 4.25%-4.5% is over 95%, but Wall Street is more concerned about Chairman Powell's comments for future policy direction [1] - Many market strategists are adopting a more defensive stance ahead of the Federal Reserve meeting due to uncertainties regarding Fed policy and trade tariffs [3] Group 2 - The utilities sector has been the best-performing sector in the S&P 500 this year, with a gain of over 6%, while the financial sector has risen by 2% and the communication services sector has declined by 2% [5] - Large technology companies are expected to perform well even in an economic slowdown, with AI spending likely to continue, making tech stocks a defensive choice [5] - Piper Sandler's analysis suggests that software companies are more attractive than semiconductor companies, with specific recommendations for stocks like Twilio and Monday.com [6] Group 3 - Short-term bonds are viewed as a good investment opportunity, with a recommendation to lock in current interest rates before the Federal Reserve meeting [7] - As of Tuesday, the yield on the 2-year U.S. Treasury bond was reported at 3.797% [7]