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U.S. Treasury prices continued to rise on Tuesday, with the 10-year yield hitting an intraday low of 4.434%, about 3.5 basis points lower than Monday's close. This movement was mainly driven by two factors: a further decline in oil prices (Brent crude fell below $80, influenced by Trump's remarks about reopening the Strait of Hormuz), and May new housing starts data coming in well below expectations.Data showed that in May, new housing starts were at an annualized rate of 1.177 million units, down 15.4% month-on-month and far below the market expectation of 1.43 million units. The previous value was also revised down from 1.465 million to 1.39 million units. Building permits came in at 1.413 million units, also below expectations. Import prices rose by 1.9% month-on-month and 6.7% year-on-year, highlighting persistent inflationary pressures on the trade front.Before the market open, a passive buy order of 1,800 contracts for September ultra-long bonds (DV01 of approximately $320,000) provided additional support. However, as yields approached a key resistance level, algorithmic selling was triggered. Hedge funds sold approximately 5,000 contracts of 5-year, 9,000 contracts of 10-year, and 5,000 contracts of ultra-long Treasury futures near the intraday highs. Meanwhile, seven new investment-grade corporate bond issuances locked in related rate-hedging needs.In terms of curve trades, the yield spread between 2-year and 10-year Treasuries narrowed to 38.7 basis points, flattening by about 1.8 basis points compared to the previous day. This reflects the market's tug-of-war pricing between slowing growth (housing data) and stubborn inflation (above-expected import prices). The 10-year yield seesawed sharply between a high of 4.481% and a low of 4.434%, failing to effectively break through the resistance level.Looking ahead, the focus will be on the tone of the first Walsh press conference by the Federal Reserve on Wednesday. If more weight is given to housing market weakness, yields could look for further support downward. If emphasis is placed on the stronger-than-expected import prices and the resulting trade-side inflationary pressures, the downside room at the front end of the current rate curve may be limited.

Meanwhile, several leading Wall Street investment banks have lowered their oil price forecasts, and key crude oil market indicators have weakened across the board.

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