10-year Treasury yield drops to 5-week low after weak auto sales

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Treasury yields took a leg lower and the market’s so-called fear index jumped on Monday after US auto sales came in weaker-than-expected for March, raising questions over the strength of the recent recovery seen in US manufacturing.

Yield on the 10-year note fell nearly 6 basis points to a 5-week low of 2.33 per cent in mid-morning trade.

Elsewhere, the Vix index, a closely watched measure of expected volatility in the US stock market, climbed by as much as 1.15 points to hit a session high of 13.52.

With auto inventory levels at near record highs, the lacklustre new vehicle sales figures reported for March are likely to fuel doubt over whether the US auto sector can bounce back from the weak start to 2017.

If the weak demand trend continues, this could affect other industries that supply the auto sector. Indeed the auto figures appeared to have overshadowed the relatively solid US manufacturing data that came out earlier this morning.

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