Treasurys Weaken on German Data
November 24 2017 - 3:38PM
Dow Jones News
By Daniel Kruger
U.S. government bond yields rose along with debt in Germany as a
gauge of sentiment among German businesses climbed to a record
high, reinforcing the outlook for improving global growth.
The benchmark 10-year Treasury note yield rose to 2.342% from
2.322% Wednesday, its largest increase since Nov. 16. The German
10-year government debt yield rose to 0.36% from 0.347% on
Thursday. Bond yields rise as prices fall.
The Ifo Institute said Friday its Business Climate Index rose to
117.5, suggesting the European economy is on track to grow 2.3%
this year. That follows a release Thursday from data firm IHS
Markit that its composite Purchasing Managers Index for the
eurozone rose to its highest level in more than 6 1/2 years.
With the global economy surging, bond yields near record lows
may face pressure to rise. "Bond markets are in bubbly territory,"
said Andrew Brenner, head of global fixed income National Alliance
Capital Markets.
One factor holding them back the persistent lack of inflation,
about which Federal Reserve officials are showing increasing
concern. Minutes from the central bank's October meeting released
Wednesday showed officials are expressing greater concern about the
absence of discernible pressures for higher consumer prices.
Though those concerns have yet to threaten the trajectory the
Fed laid out at its September meeting for raising rates and
reducing the size of the balance sheet, they present an additional
burden that makes it more difficult for yields to rise above
longstanding ranges seen this year. Similarly, robust economic data
outside the realm of inflation suggest the chances of moving to the
lower end of the range is muted as well.
Investors also remain reluctant to sell bonds and drive yields
higher as there is considerable skepticism in the market about
whether Republicans in Congress can coalesce around a plan to lower
corporate and personal taxes. The plans are expected to support
higher stock prices and raise the U.S. debt by roughly $1.5
trillion over the next 10 years.
(END) Dow Jones Newswires
November 24, 2017 15:23 ET (20:23 GMT)
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