U.S. Government-Bond Yields Fall After Jobs Data
July 16 2020 - 11:23AM
Dow Jones News
By Sebastian Pellejero
U.S. Treasury yields fell Thursday after data showed the number
of Americans who filed for unemployment benefits last week was
higher than economists expected.
The yield on the benchmark 10-year Treasury note fell to 0.604%,
according to Tradeweb, from 0.629% on Wednesday. The 30-year bond
yield followed a similar path, to trade at 1.304% from 1.330%
Wednesday. Bond yields fall when prices rise.
Yields declined after Labor Department data showed the number of
Americans filing for jobless benefits held nearly steady last week
at 1.3 million, higher than the 1.25 million figure economists had
anticipated. While new jobless claims have eased from their peak in
late March, 17.3 million Americans continue to receive unemployment
benefits, as companies remain cautious about hiring.
Meanwhile, new data from the Commerce Department Thursday showed
U.S. retail sales increased by 7.5% in June, driven by a pickup in
sales at motor vehicle dealers, furniture, clothing and electronic
stores. Retail spending totaled $524.3 billion last month, up from
$487.7 billion in May and nearly back to pre-pandemic levels.
Ultralow long-term yields indicate investors expect short-term
interest rates to remain near zero for an extended period. Analysts
said investors continue to buy Treasurys out of fear that the U.S.
economy could take a long time to recover. Investors are also
confident that the Federal Reserve will continue to support the
economy by buying Treasurys and keeping short-term rates low.
Some analysts said investors are more likely to buy Treasurys
now that the yield on the 10-year note is trading within a
relatively narrow range, after rising to near 1% in early June.
"As the 10-year yield stays firm between 0.6% and 0.7%,
investors are less fearful of buying Treasurys," said Jim Vogel,
interest-rate strategist at FHN Financial. "Investors are putting
money to work on a more disciplined basis now that a lot of their
immediate concerns are taken care of."
Investors are becoming increasingly concerned that any further
recovery in the U.S. could be stymied by the recent surge in
coronavirus infections. New cases in the U.S. rose by more than
66,000 on Wednesday, as hospitals in Texas, California and other
states continue to accommodate an increase of new patients.
While last month's bounceback in consumer spending was
encouraging, the data is "offset by the disturbing resurgence in
infections across the South and West, which threatens to send
nervous shoppers back to their homes in coming months amid
still-high joblessness," said BMO Capital Markets analysts in a
note.
Write to Sebastian Pellejero at sebastian.pellejero@wsj.com
(END) Dow Jones Newswires
July 16, 2020 11:08 ET (15:08 GMT)
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