By Ellie Ismailidou, MarketWatch
Treasury prices rose Wednesday, pushing yields lower, as
disappointing earnings releases that weighed on stocks sparked
appetite for safe-haven assets, like Treasury bonds.
After quarterly reports from Apple Inc. (AAPL) and Microsoft
Corp. (MSFT) disappointed, U.S. stocks moved lower
(http://www.marketwatch.com/story/us-stocks-on-track-to-open-lower-as-drops-by-apple-microsoft-weigh-2015-07-22)
and the Treasury market got a boost.
The yield on the 10-year Treasury declined 1.5 basis point to
2.327%, while the yield on the two-year inched 0.4 basis point
higher to 0.690%. Meanwhile, the yield on the 30-year bond fell 1.4
basis points to 3.066%.
Treasury yields fall when prices rise and vice versa.
News that U.S. home prices rose a seasonally adjusted 0.4% in
May
(http://www.marketwatch.com/story/home-prices-rise-04-in-may-fhfa-2015-07-22-991425)
sparked some Treasury selling on Wednesday morning, but overall did
not manage to reverse the bullish trend fueled by the global
risk-off sentiment.
As the economic calendar is lighter than usual this week, the
influence of earnings and risk-asset performance has been greater
than what typically occurs, analysts said.
Between now and the next Federal Reserve meeting scheduled for
July 29, "there isn't a whole lot of new data for the Fed to
review," Kevin Giddis, head of fixed income capital markets at
Raymond James, said in a note.
While Treasury investors are in a wait-and-see mode, in the rest
of the world "it seems we are coming to the brink of the loose
monetary policy," Brenda Kelly, head analyst at London Capital
Group, said in a note.
Bank of Japan Governor Haruhiko Kuroda warned yesterday that he
expected Japan's inflation rate to accelerate and hit the central
bank's 2% target by the first half of 2016, while the Bank of
England is also on inflation-watch and could move to monetary
tightening as early as August.
These events are "putting the kybosh on risk assets", Kelly
said, while falling commodity prices are putting pressures on the
corporate bond market.
(http://www.marketwatch.com/story/falling-oil-prices-add-to-high-yield-bond-markets-long-list-of-woes-2015-07-22)
Meanwhile in the eurozone, sovereign bond yields were mostly
lower ahead of demanded by the country's creditors. Formal
negotiations on a third bailout program for Greece can only start
once the measures have legislative approval. Conversely, failure to
gain a majority vote could indicate Autumn elections.
As european equities also moved lower
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQqQIwAGoVChMIzZKHzOzuxgIVRjI-Ch3hGwRE&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Feuropean-stocks-drop-with-tech-shares-under-pressure-2015-07-22&ei=LJuvVc3MFsbk-AHht5CgBA&usg=AFQjCNEVkqDg6J_rjmaEbgaoFK16wPa14w&sig2=U8KBzmFs5ZoIsVheoVJ76g&bvm=bv.98197061,d.cWw),
the yield on the benchmark German 10-year bund declined 1.6 basis
point to 0.711%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires