U.S. Government Bonds Strengthen Ahead of Fed Meeting
December 11 2017 - 12:22PM
Dow Jones News
By Gunjan Banerji
Government bonds strengthened Monday to open a week that
contains major central bank meetings around the world.
The yield on 10-year Treasury notes fell to 2.367% in early
trading, according to Tradeweb, from 2.383% on Friday. Yields fall
as bond prices rise.
The yield decline began a week that includes a Federal Reserve
meeting, at which investors expect the central bank to raise
interest rates, along with meetings of the European Central Bank
and Bank of England.
Investors also will be watching key data points such as retail
sales figures and November consumer-price index data, a key measure
of inflation. Inflation is a threat to long-term government bond
prices because it chips away at the purchasing power of the debt's
fixed payments.
The yield on the 10-year Treasury note slipped to as low as
2.356%, according to Tradeweb, as news broke of an explosion in New
York City's Port Authority Bus Terminal near Times Square. A man
tried to set off an explosive device he was wearing near one of the
state's busiest transit centers. Treasury yields pared some of the
declines in later trading.
The 10-year yield's move lower comes after two consecutive weeks
of gains. Still, the Treasury market likely will continue to trade
in a narrow range as investors watch tax-overhaul plans move
through Congress, said Scott Buchta, head of fixed-income strategy
at Brean Capital.
Tax cuts could add to the U.S. government deficits, prompting
additional borrowing that could increase the supply of bonds in the
market and push yields higher.
"It's wait and see mode right now," Mr. Buchta said.
Government bonds auctions also are scheduled for this week.
Auctions can sometimes lead Treasurys to weaken because of added
supply in the market. The government is due to sell three-and
10-year notes Monday.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
December 11, 2017 12:07 ET (17:07 GMT)
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