BOND REPORT: Treasury Yields Tick Higher As Traders Await U.K. Parliament Vote On Brexit Proposal
October 18 2019 - 9:01AM
Dow Jones News
By Sunny Oh
Fed's vice-chair Richard Clarida due to speak at 11:30 a.m.
U.S. Treasury yields mostly rose on Friday as investors eyed
developments on Brexit ahead of Parliament's vote on the
weekend.
What are Treasurys doing?
The 10-year Treasury note yield was up 1.2 basis points to
1.769%, while the 2-year note rate was mostly unchanged at 1.607%.
The 30-year bond yield rose 1.6 basis points to 2.257%.
What's driving Treasurys?
Bond-market trading was muted with market participants awaiting
the U.K.'s Parliament vote on U.K. Prime Minister Boris Johnson's
proposal at Saturday. Optimism initially surrounded Johnson's deal
after European Union officials backed the agreement, but a lack of
support from Northern Ireland's Democratic Unionist Party has
weighed on the likelihood of the bill's ratification.
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)
In economic news, China's National Bureau of Statistics said
growth of the world's second-largest economy slowed to 6% growth
(http://www.marketwatch.com/story/chinas-economic-growth-continues-to-cool-off-2019-10-17)
in the third quarter from a 6.2% pace in the second quarter, and
the slowest pace since the early 1990s, reflecting the impact of
the U.S. - China trade dispute and slowing world growth also.
Traders may also look ahead to several speeches by senior
Federal Reserve officials. Dallas Fed President Rob Kaplan is set
to speak at 9 a.m., followed by Kansas City Fed President Esther
George. Fed Vice Chairman Richard Clarida is due to talk at 11:30
a.m.
In money markets, New York Fed President John Williams said late
Thursday
(http://www.marketwatch.com/story/feds-williams-says-central-bank-would-adjust-plan-to-soothe-funding-markets-as-appropriate-2019-10-17)that
the central bank was closely monitoring its measures to soothe
pressures in funding markets, and could adjust its plans. Since
funding markets seized up last month, the U.S. central bank has
regularly intervened to provide liquidity, offering daily
repurchasing agreements to lend out funds to market participants
thirsty for cash and announcing $60 billion of bill purchases at
least through the second half of 2020.
Federal Reserve officials are heading into their meeting in two
weeks likely to cut interest rates while debating whether they have
done enough for now to vaccinate the economy against growing risks
of a sharper slowdown, the Wall Street Journal reported
(https://www.wsj.com/articles/fed-eyes-another-rate-cut-weighs-when-to-stop-11571391003?mod=hp_lead_pos7).
What did market participants' say?
"Today is likely to be a somewhat more tepid session given the
binary outcome of the weekend Brexit vote, with the bill set to be
decided on Saturday. That assumes, of course, we do not have any
more big headlines surrounding the DUP," wrote analysts at NatWest
Markets.
(END) Dow Jones Newswires
October 18, 2019 08:46 ET (12:46 GMT)
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