U.S. Government Bonds Rally on Turmoil in Other Markets
November 16 2018 - 4:55PM
Dow Jones News
By Daniel Kruger
U.S. government bond prices rose for a fifth consecutive trading
session on Friday as investors assessed how recent volatility in
markets from stocks to oil is affecting the economy and Federal
Reserve policy.
The yield on the benchmark 10-year Treasury note fell to 3.074%,
according to Tradeweb, from 3.116% Thursday, retreating further
from a seven-year high of 3.232% reached on Nov. 8. The streak of
declines is the longest since May 2017.
Yields, which fall when bond prices rise, declined after Fed
Vice Chairman Richard Clarida on Friday emphasized the importance
of relying on economic data to inform central bank policy as
interest rates approach their so-called neutral rate.
Some analysts said recent commentary from central bank officials
suggested they were unlikely to surprise investors with a faster
pace of interest-rate increases. On Wednesday, Fed Chairman Jerome
Powell said policy makers are monitoring the slowdown in global
growth for signs that it could affect growth in the U.S. He also
noted that recent declines in stocks could weigh on the economy by
contributing to tighter financial conditions.
Demand for U.S. government bonds has been supported by falling
share prices, as questions have emerged about the durability of the
bull market in stocks, and as the performance of some well-known
companies has come under closer scrutiny.
"You've had a couple of Fed officials come out and say there's
weakness in the global economy and that may spread to the U.S.,"
said Dan Heckman, senior fixed-income strategist at U.S. Bank
Wealth Management.
Bonds have also been supported by concerns about recent
volatility in stocks and the pace of growth in China. Investors are
also watching turmoil in the U.K. surrounding Brexit talks with the
European Union. British Prime Minister Theresa May could face a
no-confidence vote as officials in her cabinet remain skeptical
about a proposed separation agreement.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
November 16, 2018 16:40 ET (21:40 GMT)
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