U.S. Government Bonds Edge Lower on Mixed Data
December 13 2018 - 12:26PM
Dow Jones News
By Daniel Kruger
U.S. government bond prices edged lower Thursday after data
continued to show the economy remains on solid footing, yet with
few signs of inflation building.
The yield on the benchmark 10-year Treasury yield rose to a
recent 2.913%, according to Tradeweb, from 2.908% Wednesday. The
10-year yield had fallen to 2.851% Friday from a seven-year high of
3.232% last month.
Yields, which climb when bond prices decrease, were higher after
the Labor Department said Thursday that the number of workers
making first-time jobless claims declined last week. Upward
pressure on yields was moderated by a separate Labor Department
report Thursday that showed prices for goods imported into the U.S.
declined in November. The data suggests that rising tariffs imposed
by President Trump have yet to produce significant inflationary
pressure, analysts said.
Investors are looking for any signs that would suggest a shift
in the direction of growth as Federal Reserve officials are
expected to become more dependent on fresh information about the
economy's performance when making decisions about setting interest
rates.
Expectations for Fed rate increases in 2019 have declined in the
past month as investors have focused more signs that economic
growth will slow further from its rapid pace earlier this year.
While U.S. output increased at an annualized rate of 4.2% in the
second quarter, the Federal Reserve Bank of Atlanta's GDP Now
tracker currently forecasts a 2.4% growth rate for the last three
months of this year.
Fed-funds futures, which investors use to bet on the direction
of central-bank policy, show a 13% probability that the Fed will
raise rates three times by the end of June. That's down from 29% a
month ago.
"It's not going to be robust growth," said Daniel Oh, who
manages bonds at Osterweis Capital Management. At the same time,
"we just don't see things falling apart."
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
December 13, 2018 12:11 ET (17:11 GMT)
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