BOND REPORT: Treasury Yields Edge Lower As Wall Street Focuses On Fed Policy
December 17 2018 - 08:27AM
Dow Jones News
By Mark DeCambre, MarketWatch
Treasury yields inched lower to kick off trading on Monday, in
an important week that includes the Federal Reserve decision on
Wednesday--one that could influence trading in government bonds
that have thus far been colored by signs of weakening global
economy.
The 10-year Treasury note yield edged off 1.1 basis points to
2.880%, after marking its largest yield gain since Nov. 2,
according to Dow Jones Market Data. The 2-year note yield fell 1.2
basis points to 2.721%, while the 30-year bond declined 0.6 basis
point to 3.138%.
Bond prices move in the opposite direction of yields.
Read:The big question this week: Is the Fed about to completely
break this market?
(http://www.marketwatch.com/story/the-big-question-this-week-is-the-fed-about-to-completely-break-this-market-2018-12-17)
Concerns about the health of the stock market, with the Dow
Jones Industrial Average closing in correction territory on Friday,
and lackluster inflation have highlighted investors uncertainty
about the rate-hike path for the U.S. in 2019, even as a fourth
rate increase remains expected at the conclusion of the Fed's
two-day policy.
A recent round of remarks from members of the Federal Open
Market Committee have led some investors to look for the central
bank to pause its rate-hike cycle after delivering its increase on
Wednesday.
Wall Street will watch to see if Fed boss Jerome Powell signals
a more hesitant course of monetary-policy normalization, in light
of a shaky market and growing signs of waning economic
expansion.
On Friday, growth in China's industrial output and retail sales
came in weaker than expected, stoking fears that pockets of
weakness were cropping up in the world's second-largest
economy.
"Looking into 2019, the markets are understandably nervous that
the Fed will leave real rates too high," wrote Sean Darby, chief
global equity strategist at Jefferies, in a Monday note.
Still, U.S.'s economic growth has remained sufficiently strong
to lead some economists to predict
(http://www.marketwatch.com/story/heres-why-the-fed-wont-save-the-stock-market-despite-its-worst-december-start-since-1980-2018-12-15)that
Fed may be reluctant to dial back its pace of tightening, even if
the Dow, S&P 500 and the Nasdaq Composite indexes are in
correction, widely defined as a 10% drop from a recent peak.
Looking ahead, fixed-income investors will watch a reading of
regional industrial production, the Empire State index for
December, which is slated to be released at 8:30 a.m. Eastern Time,
while the home builders index for the same month is scheduled for
10 a.m.
Beyond the Fed, market participants will watch for the final
reading of gross domestic product on Friday, as well as
developments that threaten to partially shut down the U.S.
government, as well as policy updates from the Bank of Japan and
the Bank of England, amid that country's messy process of exiting
from the European Union.
(END) Dow Jones Newswires
December 17, 2018 08:12 ET (13:12 GMT)
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