Treasurys Extend Rally
July 21 2017 - 4:16PM
Dow Jones News
By Sam Goldfarb
U.S. government bonds strengthened Friday, extending a two-week
rally as investors continued to dial back expectations for
inflation and tighter monetary policy.
The yield on the 10-year Treasury note settled at 2.232%, down
from 2.266% Thursday and 2.319% a week earlier.
Yields, which fall when bond prices rise, have declined with few
interruptions over the past 10 trading sessions, retracing much of
their climb from a recent selloff.
Investors and analysts have attributed the rally in part to a
change in tone from Federal Reserve officials, who have signaled
that tepid inflation could cause the central bank to raise interest
rates more slowly than previously anticipated.
In addition, European Central Bank officials have also tamped
down speculation about an imminent shift toward less monetary
stimulus.
An ECB survey released Friday showed forecasters see annual
inflation in the eurozone running at 1.5% this year, 1.4% next year
and 1.6% in 2019, all below the ECB's 2% target and 0.1 percentage
point below the projections made in the previous survey conducted
in April.
The report came one day after the ECB held its interest-rate
policy and bond-buying program steady. In a news conference
following the meeting, ECB President Mario Draghi said he didn't
see convincing signs of inflation picking up.
The yield on the 10-year German bond closed Friday at 0.504%,
according to Tradeweb, having settled at 0.538% Thursday.
Mr. Draghi on Thursday was "a little more dovish than what
market participants were looking for," said Mary Ann Hurley, vice
president of fixed-income trading at D.A. Davidson.
Also Thursday, the Bank of Japan kept its bond-buying program
steady but pushed back the date when it expects 2% inflation.
Bond buying from the ECB and the BOJ has played a large role in
pushing down government-bond yields in the developed world to
historically low levels.
Analysts have warned that the value of government bonds could
fall when these central banks reduce purchases.
Write to Sam Goldfarb at sam.goldfarb@wsj.com
(END) Dow Jones Newswires
July 21, 2017 16:01 ET (20:01 GMT)
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