BOND REPORT: Treasury Yields Climb Amid Brexit Deal Drama
By Sunny Oh
Auctions for $113 billion of Treasury debt will be held this
U.S. Treasury yields pushed higher Monday as U.K. Prime Minister
Boris Johnson was prevented from holding a vote on his agreement
dictating the country's exit from the European Union, presenting
another complication to the deal's passage.
What are Treasurys doing?
The 10-year Treasury note yield rose 4.9 basis points to 1.799%,
while the 2-year note rate was up 3.3 basis points to 1.609%. The
30-year bond yield picked up 4.6 basis points to 2.294%.
In the last few weeks, the benchmark maturity's rate has
remained in a tight range between 1.5% and 1.9% since the beginning
of September, as positive developments on geopolitical uncertainty
has been balanced against the growing gloom around the U.S.'s
Prices for U.S. government debt fall as yields rise.
What's driving Treasurys?
Bond markets recently have been moving in step with uncertainty
surrounding Britain's plans to exit from the European Union, with
Johnson renewing his efforts to get his Brexit deal ratified after
a Saturday setback. But House of Commons Speaker John Bercow
blocked the Prime Minister from holding a second vote on his
On the weekend, Johnson's bill was postponed by lawmakers, and
then stymied by an amendment ensuring that any kind of agreement to
leave the EU would have to pass through the House of Commons, the
lower chamber of British Parliament. Johnson later asked EU
officials for a three-month extension, but analysts say he will be
looking to push for a deal before Oct. 31.
The 10-year U.K. government bond yield rose 4.7 basis points to
0.756%, Tradeweb data show.
Investors were also buoyed by President Donald Trump's comments
on the prospect of a U.S.-China trade deal, which he said was
coming along great on Monday (https://t.co/cWKkw7O8SI?amp=1).
Mario Draghi will preside over his last meeting as the president
of the European Central Bank this week. This comes as signs of
within its monetary policy-making committee have surfaced over the
risks around additional easing in an ultralow interest rate
Also in focus, auctions for $113 billion of Treasury debt will
be held this week. U.S. government debt auctions can influence the
price of outstanding bonds as broker-dealers make room for the
influx of fresh debt issuance.
What did market participants' say?
"We think the uncertainty at present will prevent larger market
moves, particularly as it appears now even more likely that the
government can push the actual deal through the House of Commons.
In either case, a near-term 'no deal Brexit' seems very unlikely
indeed," wrote Peter Schaffrik, global macro analyst for RBC
The struggle to push a Brexit agreement through Parliament
"doesn't change much for investors. This is all about tactics,"
said Chris Iggo, chief investment officer of core investments at
AXA Investment Managers, in an interview with MarketWatch.
(END) Dow Jones Newswires
October 21, 2019 13:16 ET (17:16 GMT)
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