BOND REPORT: Treasury Yields On Track For First Monthly Drop Since July
February 28 2017 - 9:12AM
Dow Jones News
By Joseph Adinolfi, MarketWatch
President Donald Trump will address Congress at 9 p.m.
Eastern
Treasury yields were essentially flat on Tuesday, but remained
on track to notch their first monthly drop since July, as investors
await a key address from President Donald Trump.
Yields, which fall as bond prices rise, declined in February as
the Federal Reserve warned about "substantial uncertainty"
surrounding potential changes in U.S. fiscal policy promised by
President Donald Trump.
Trump administration officials have cautioned that the
administration must first develop a plan for repealing and
replacing President Obama's signature health-care law known as
Obamacare, something Trump described as a monumentally difficult
task, before moving on efforts to reform the tax code among other
campaign pledges.
The yield on the 10-year Treasury note was flat at 2.362%,
leaving it on track to post a 10 basis point for the month of
February. The yields on the two-year note rose 0.8 basis point to
1.208%, on track to notch a marginal monthly drop. The yield on the
30-year bond was unchanged at 2.982%, but remained on track for a
10 basis point drop.
Yields briefly ticked higher as investors digested a torrent of
economic data, including the federal government's second estimate
of fourth-quarter economic growth, as well as a widely watched
report on consumer-price inflation.
But demand for Treasurys quickly reasserted itself. Typically,
bond-fund managers buy up Treasurys during the final trading
sessions of the month to align their funds with changes in
benchmark indexes like the Bloomberg Barclays U.S. Aggregate Bond
index, according to Ian Lyngen and Aaron Kohli, fixed-income
strategists at BMO Capital Markets.
Tuesday's main event begins at 9 p.m. Eastern, when Trump will
address a joint session of Congress. The Wall Street Journal has
reported that he will focus on health-care and tax reform.
Gennadiy Goldberg, an interest-rates strategist at TD
Securities, said investors will be watching for new details about
the president's fiscal plans.
"If there are specific details, then we'll get a little more
confident that the agenda is basically intact and the timeline for
implementing tax reform and infrastructure spending is basically
unchanged from what the House and Trump have been saying," Goldberg
said.
(END) Dow Jones Newswires
February 28, 2017 08:57 ET (13:57 GMT)
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