Treasury yields slipped across the board early Tuesday as U.S. stock indexesretreated from record highs and a gauge of consumer confidence dropped to the lowest level in six months.

Investors also were weighing signs of a slowdown in China’s service sector as they await U.S. data on the labor market due on Friday.

What are yields doing?

The yield on the 10-year Treasury note

fell to 1.281%, compared with 1.284% at 3 p.m. Eastern on Monday. Yields and debt prices move in opposite directions.

The 2-year Treasury note yield

was around 0.200%, versus 0.203% late Monday.

The 30-year Treasury bond yield

slipped to 1.888% versus 1.899% Monday afternoon.

What’s driving the market?

Treasury yields moved lower along with all three major U.S. stock indexes, as investors prepared to close out a winning August and the S&P 500

and Nasdaq Composite

indexes pulled back from closing records. Attention is now turning to this Friday’s nonfarm payrolls report.

Data released today showed the U.S. Conference Board’s index of consumer confidence sinking to a six-month low in August as a result of the spreading coronavirus delta variant. Meanwhile, a Chicago area purchasing managers index reading for August dropped to 66.8 from 73.4 previously.

U.S. home prices continued to grow at a record pace in June, according to a leading barometer. The S&P CoreLogic Case-Shiller Home Price Index showed that home prices increased 18.6% from a year ago in June, the third consecutive month of record growth in the more than 30-year history of the index. The separate 20-city index, which measures price appreciation in major metropolitan areas, saw a 19.1% year-over-year gain.

Yields had also edged lower Monday, as investors continued to buy Treasurys in the wake of Federal Reserve Chairman Jerome Powell’s virtual address last week to the Kansas City Fed’s Jackson Hole symposium, in which he signaled support for beginning the process of winding down monthly bond purchases this year but offered no solid timetable. Also, Powell emphasized that the start of the taper process, when it arrives, won’t be meant to signal the timing of interest rate increases.

Read: How Powell’s Jackson Hole remarks have refreshed a rally in both stocks and bonds

Analysts said Powell’s remarks put a premium on coming U.S. economic data, such as Wednesday’s manufacturing index and Friday’s release of both the jobs report and services index from the Institute for Supply Management. Bullish investors will hope for “Goldilocks” type data that shows the economy is improving, but not running so hot as to accelerate a move by the Fed, analysts said.

Meanwhile on Tuesday, China’s official nonmanufacturing purchasing managers’ index unexpectedly fell into contractionary territory in August, dragged down by efforts to contain the delta variant outbreak.

What analysts are saying

“The U.S. 10-year yield probably needs outright positive surprises from the ISMs and the payrolls to get the 1.37% first resistance back on the radar,” analysts at Brussels-based KBC Bank wrote in a note.

“We saw little in Powell’s speech to dissuade us from the view that November’s Fed meeting will most likely see a tapering announcement, but we suspect that this is a widely shared view and we doubt any significant market response if that proves correct,” said Steve Barrow, head of G-10 strategy at Standard Bank, in a note to clients. “As we have said many times, the danger for the markets is in the data, not in the Fed per se,” he said. “The Fed will only surprise and potentially cause carnage in the market if the data surprises and, so far, these surprises have been modest and, most often to the lower side of market expectations, not the high side.”

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