BOND REPORT: Treasury Yields Edge Lower As Investors Raise Questions Over Tentative Brexit Deal
October 17 2019 - 1:16PM
Dow Jones News
By Sunny Oh
Doubts linger around likelihood of Brexit deal ratification
U.S. Treasury yields fell Thursday after optimism waned around
the U.K.'s tentative agreement to leave the European Union, amid
questions of how it will get approved in a divided British
Parliament on Saturday.
What are Treasurys doing?
The 10-year Treasury note yield was down 0.9 basis points to
1.736%, while the 2-year note rate was unchanged at 1.586%. The
30-year bond yield fell 1.1 basis points to 2.221%.
What's driving Treasurys?
The earlier selloff in bond markets faded after stocks lost
their momentum after analysts said there remained substantial
obstacles before the Brexit agreement is ratified. It is unclear if
U.K. Prime Minister Boris Johnson's proposal will be approved by
Parliament under the opposition from Northern Ireland's Democratic
Unionist Party.
See: What a Brexit deal would mean for U.S. stocks and global
investors
(http://www.marketwatch.com/story/what-a-brexit-deal-would-mean-for-us-stocks-and-global-investors-2019-10-17)
Johnson had announced the U.K. and European negotiators had
managed to strike a tentative Brexit deal, with European Commission
President Jean-Claude Juncker saying it was a "fair and balanced
agreement." Investors said the breakthrough lowered the chance of
the U.K. leaving the EU without a trade deal in hand.
The U.K. 10-year government bond yield was up 0.9 basis point to
0.702%, Tradeweb data show.
The Dow Jones Industrial Average and the S&P 500 index were
teetering near break-even levels.
Investors handled a raft of U.S. economic data in the morning.
The Philadelphia Fed manufacturing index fell to 5.6 in October,
after hitting 12 in September. Housing starts slumped 9.4% in
September to an annual pace of 1.26 million, while home-builder
permits dropped 2.7% last month to a pace of 1.38 million.
Industrial production fell 0.4% in September
(http://www.marketwatch.com/story/industrial-output-falls-by-most-in-five-months-pushed-lower-by-gm-strike-2019-10-17),
the largest one-month drop since April, and below the 0.2% expected
by economists, according to a MarketWatch survey.
See: Here's what has been agreed between the EU and the U.K. on
Brexit
(http://www.marketwatch.com/story/heres-what-has-been-agreed-between-the-eu-and-the-uk-on-brexit-2019-10-17)
Several Federal Reserve officials could also give clues to the
outlook for another rate cut before the end of the year. Fed Gov.
Michelle Bowman is due to speak at 2 p.m., and New York Fed
President John Williams at 4:20 p.m.
What did market participants' say?
"A Brexit deal could still have considerable headwinds within
U.K. Parliament. Headline risk will certainly be front and center,"
wrote Tom di Galoma, managing director of Treasurys trading at
Seaport Global Securities.
(END) Dow Jones Newswires
October 17, 2019 13:01 ET (17:01 GMT)
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