BOND REPORT: 10-year Treasury Yield Hits 3-year High
January 19 2018 - 9:34AM
Dow Jones News
By Sunny Oh
Yields on rise as investors weigh government shutdown threat
Treasury yields rose slightly on Friday to cap off the weeklong
climb as investors focused on the threat of a potential government
shutdown as the Senate prepares to take up a short-term spending
bill.
What are Treasurys doing?
The yield on the benchmark 10-year Treasury note rose to 2.630%,
from 2.611% late Thursday, according to Tradeweb. That's the
highest yield on the note since September 2014. It had set an
intraday high of 2.643% earlier in the day.
The 2-year note yield was little changed at 2.048%, while the
30-year bond yield ticked higher to 2.911%, versus 2.888%.
Bond prices move inversely to yields.
What's driving markets?
Market participants said the chances of a stopgap spending bill
clearing the Senate has diminished amid growing tensions between
the Democrats and Republicans. If lawmakers do not pass the bill by
Friday, the government will go into a partial shutdown this
weekend. The Senate is set to vote on Friday morning
(http://www.marketwatch.com/story/republicans-appear-to-have-house-votes-for-funding-bill-but-shutdown-still-looms-2018-01-18)
after the House passed the short-term spending measure.
See:A government shutdown 'could reintroduce investors to the
fact that markets go down'
(http://www.marketwatch.com/story/a-government-shutdown-could-reintroduce-investors-to-the-fact-that-markets-go-down-2018-01-19)
Also read: This is what happens in the stock market when the
government shuts down
(http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)
The political uncertainty roiled the bond market, pushing the
10-year note yield to a 14-month high. But rising Treasury yields
also reflect concerns about strengthening global growth and
improving inflation prospects. One market based measure of
inflation expectations
(http://www.marketwatch.com/story/inflation-expectations-touch-3-year-high-after-bond-auction-2018-01-18)surged
to 2.09% on Thursday, a three-year high.
What are market participants saying?
"The economy remains in solid shape, and a protracted shutdown
would need to occur before growth would be significantly affected.
Market reactions generally have been muted to these events in the
past," said Craig Holke, investment strategy analyst for Wells
Fargo Investment Institute.
What else is on investors' radar?
The White House is considering San Francisco Fed President John
Williams for vice chairman
(https://www.wsj.com/articles/white-house-considering-san-francisco-fed-president-john-williams-for-feds-no-2-job-1516317905)
of the Fed's Board of Governors, news reports said. The position is
the second highest ranking member of the central bank.
Friday's docket will be packed with speeches from several
members of the central bank. Atlanta Fed President Raphael Bostic
will speak at 8:45 a.m. Eastern. Fed vice chairman for supervision
Randal Quarles will talk at 1 p.m. Soon after, Williams will speak
at 1:30 p.m.
(END) Dow Jones Newswires
January 19, 2018 09:19 ET (14:19 GMT)
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