U.S. Government-Bond Yields Rise as Economies Reopen -- Update
May 26 2020 - 6:09PM
Dow Jones News
By Sebastian Pellejero
U.S. government-bond yields climbed Tuesday, lifted by
investors' optimism over resumed economic activity around the
world.
The yield on the benchmark 10-year U.S. Treasury note rose
toward the high end of its recent range and closed at 0.697%,
according to Tradeweb. That compares with 0.659% at Friday's
close.
Yields, which rise when bond prices fall, climbed with global
stocks amid signs of a pickup in spending on hotels, restaurants,
and airlines in the U.S., as well as a decline in the daily number
of new coronavirus infections.
"Sentiment has changed for the positive over the last week or
two," said Larry Milstein, head of government and agency trading at
R.W. Pressprich & Co. "With risk markets improving and there
being a tremendous deficit that the U.S. government has to fund, we
could see Treasurys go higher, and certainly approach 1% on the
10-year note."
The Federal Reserve's plans to slow its purchasing of Treasurys
could also help drive yields higher, said Mr. Milstein. The Fed
plans to purchase around $20 billion in Treasury securities this
week, down from $30 billion last week and $35 billion two weeks
ago.
The yield on the 10-year note, which tends to move along with
expectations for economic growth and inflation, has stalled around
two-thirds of a percentage point recently, a sign of investors'
fears about the pandemic's long-term hit to the economy.
U.S. corporate bond exchange-traded funds rose during early
trading Tuesday before paring gains. BlackRock's iShares U.S.
investment-grade corporate bond exchange-traded fund climbed 0.2%
intraday before finishing the day down 0.1%, according to FactSet,
while its high-yield ETF rose 0.8%.
As of Friday, the average extra yield investors demanded to hold
investment-grade corporate bonds over Treasurys was 1.82 percentage
points.
The U.S. dollar weakened. The WSJ Dollar index, which measures
the dollar relative to 16 other currencies, fell 0.8% to 92.89
Tuesday, according to Dow Jones Market Data.
Write to Sebastian Pellejero at sebastian.pellejero@wsj.com
(END) Dow Jones Newswires
May 26, 2020 17:54 ET (21:54 GMT)
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