BOND REPORT: Treasury Yields Budge Up Above 2.25% After OPEC Meeting
May 25 2017 - 9:49AM
Dow Jones News
By Sunny Oh
10-year Treasury yields fluctuates around 2.25%
Treasury yields fell after a meeting of the Organization of the
Petroleum Exporting Countries showed members had agreed on a
nine-month extension to its previous production cuts.
The yield for the 10-year Treasury note gained 0.4 basis point
to 2.256%. Bond prices move inversely to yields. The 2-year note
added 0.4 basis point to 1.290%, while the 30-year note, or the
long bond, rose 0.3 basis point to 2.928%.
Treasury yields showed little response to OPEC's meeting as the
length of the extension was widely anticipated. Deeper production
cuts, however, might have pushed oil prices higher, analysts said,
and lifted Treasury yields through higher inflation expectations.
Although, the correlation between energy prices and rates have
slowly been eroded, oil prices can ultimately lift consumer
prices.
West Texas Intermediate for July delivery fell 1.5% to $50.58 a
barrel, putting it on track for the lowest settlement level in a
week.
See: Oil slides below $51 as OPEC agrees on 9-month output
extension
(http://www.marketwatch.com/story/oil-reverses-some-losses-as-investors-get-ready-for-opec-meeting-2017-05-25)
On the data front, the trade deficit for April widened to $67.6
billion in April from $65.1 billion in March, falling below the
expectation of $64 billion from economists surveyed by MarketWatch.
The number of Americans applying for unemployment benefits for the
week rose by 1,000 to 234,000 from the week ended May 20
(http://www.marketwatch.com/story/low-jobless-claims-look-like-rerun-of-early-1970s-2017-05-25).
While the four-week jobless claims average fell by 5,750 to
235,250, the lowest since April 1973.
Yields rose after investors interpreted the falling number of
initial jobless claims as a sign of a solid job market. Economists,
however, have been mostly scratching their heads as to when hourly
earnings and wages will rise, with the U.S. economy settling at
4.4% unemployment, a level considered near or at full
employment.
Traders will look ahead to a docket of Fed speakers. Fed. Gov.
Lael Brainard will participate in a panel discussion at 10 a.m.
Eastern. St. Louis Fed President James Bullard, a nonvoting member
of its interest-rate setting committee, will give a talk on
economics and monetary policy in Tokyo, Japan at 9 p.m.
Eastern.
The Treasury Department will auction off $28 billion of 7-year
notes. New sales of U.S. government paper can influence prices and
yields for the outstanding Treasurys market.
(http://www.marketwatch.com/story/oil-reverses-some-losses-as-investors-get-ready-for-opec-meeting-2017-05-25)
(END) Dow Jones Newswires
May 25, 2017 09:34 ET (13:34 GMT)
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