U.S. Bonds Higher After Contentious Speech From Trump
August 23 2017 - 03:53PM
Dow Jones News
By Akane Otani U.S. government bond prices rose Wednesday, as combative rhetoric from
the White House pressured stocks while stoking demand for assets
seen as safer stores of value.
The yield on the benchmark 10-year U.S. Treasury note settled at
2.171% compared with 2.215% Tuesday. Yields fall as bond prices
rise.
Stocks fell, while assets viewed by investors as havens like
government bonds and gold climbed, after President Donald Trump
said Tuesday evening that he would shut down the government if
necessary to secure funding to build a wall along the southwest
border.
Speaking at his first rally after a violent white supremacist
protest in Charlottesville, Va., Mr. Trump also attacked his GOP
colleagues for their failure to repeal and replace the Affordable
Care Act and said he might terminate the North American Free Trade
Agreement.
"The rhetoric and belligerence out of Washington is a gift that
keeps on giving" to the bond market, said Bryce Doty, a senior
portfolio manager at Sit Investment Associates. "It creates a
quality opportunity every couple of days for investors."
Still, any rebound in the bond market is likely to be
short-lived, investors and analysts say. Treasurys have largely
traded in a narrow range this summer even after developments such
as a flare-up in tensions between North Korea and the U.S., White
House staffing changes and fallout in the business community over
Mr. Trump's response to the Charlottesville protests.
In another sign of a lull in the bond market, a measure of
expected volatility in the Treasury market -- the Bank of America
Merrill Lynch MOVE Index -- fell to an all-time low earlier this
month, and has traded near that level since then.
The real risks to the Treasurys market, many say, won't come
until next month, when the Federal Reserve is expected to begin
reducing its massive portfolio of bonds and other assets, and
possibly offer additional clues on the path for interest-rate
increases. For most of the year, investors have been betting that
soft inflation would keep the Fed from aggressively backing out of
its stimulus program.
Until there is more clarity on how the Fed plans to act, "we
probably won't see much shake-up," Mr. Doty said.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
August 23, 2017 15:38 ET (19:38 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.