BOND REPORT: Treasury Yields Tick Higher As Traders Await U.K. Parliament Vote On Brexit Proposal

Date : 10/18/2019 @ 1:01PM
Source : Dow Jones News

BOND REPORT: Treasury Yields Tick Higher As Traders Await U.K. Parliament Vote On Brexit Proposal

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)

Copyright (c) 2019 Dow Jones & Company, Inc.


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