Investors are fixating on corporate and government debt sales

Treasury price fell Monday, and yields rose, as investors attempted to digest the potential impact of a glut of debt from the likes of Apple and Kraft-Heinz and a trillions in coming government paper set to hit the market soon, which could in toto lower prices for existing bonds. The focus on the coming deluge of offerings shifted attention away from elevated tensions between China and the U.S., which had earlier supported bond buying in the session.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.694% was down 0.5 basis point to 0.636%, but up around 4 basis points from its overnight low of 0.597%. The 2-year note rate TMUBMUSD02Y, 0.173% fell 2 basis points to 0.182%, its lowest since September 2011, while the 30-year bond yield TMUBMUSD30Y, 1.412% rose 1.7 basis points to 1.296%, its highest since April 14. Bond prices fall as yields rise.

What’s driving Treasurys?

Treasurys came under pressure on Monday’s session amid a deluge of corporate debt issuance. As part of the underwriting process, banks will sell Treasurys to hedge against a surge in interest rates. An unexpected increase in yields can hurt banks that have temporarily warehoused the bonds while they are lining up buyers.

Altria MO, -1.27%, Kraft-Heinz KHC, -3.11%, Amgen AMGN, -2.47% and Starbucks SBUX, -0.48% are among the companies that sold debt on Monday, with Apple’s AAPL, -0.57% four-part debt deal drawing the attention of income-hungry investors.

Raytheon Technologies Corp., Caterpillar share losses contribute to Dow’s 25-point drop

Shares of Raytheon Technologies Corp. and Caterpillar are trading lower Monday afternoon, sending the Dow Jones Industrial Average into negative territory. The Dow DJIA, -1.58% was most recently trading 26 points lower (-0.1%), as shares of Raytheon Technologies Corp. RTX, +0.06% and Caterpillar CAT, -2.55% are contributing to the index’s intraday decline. Raytheon Technologies Corp.’s shares are down $2.49, or 4.1%, while those of Caterpillar are down $3.57, or 3.2%, combining for an approximately 42-point drag on the Dow. Also contributing significantly to the decline are Dow Inc. DOW, -2.99%, American Express AXP, -1.30%, and Boeing BA, -3.69%. A $1 move in any of the benchmark’s 30 components results in a 6.86-point swing.