U.S. Government-Bond Yields Tick Lower After Mixed Economic Data
September 24 2020 - 11:59AM
Dow Jones News
By Sebastian Pellejero
U.S. government-bond yields edged lower Thursday after mixed
data on jobs and housing signaled an erratic economic rebound.
The yield on the benchmark 10-year Treasury note recently traded
at 0.668%, according to Tradeweb, down from 0.676% at Wednesday's
close. Yields fall as bond prices rise.
The 10-year yield initially declined after Labor Department data
showed that Americans filing for jobless benefits last week held
steady at around 870,000, higher than economists surveyed by The
Wall Street Journal had anticipated and around four times the level
before the coronavirus hit in the spring. While new jobless claims
have eased from their peak, around 12.6 million Americans continue
to receive unemployment benefits.
The yield pared that decline after data from the Commerce
Department showed that purchases of new single-family houses rose
for the fourth consecutive month. New home sales increased by 4.8%
in August to more than 1 million, well above the 0.8% decline that
economists had forecast.
The 10-year yield traded within a narrow range around 0.66%
throughout the summer, weighed down by factors including investors'
expectations for erratic economic recovery, years of near-zero
interest rates and billions of dollars of bond purchases by the
Federal Reserve.
"We've had a quick [economic] rebound, but the Treasury market
seems to be stuck at these trading levels," said Larry Milstein,
head of government and agency trading at R.W. Pressprich &
Co.
Central bank officials have stepped up their calls for
additional fiscal support to bolster the U.S. economy. In recent
testimony on Capitol Hill, Chairman Jerome Powell said Congress and
the White House had more power to hasten the recovery than the
central bank.
Concerns about the prospects for additional government spending
have weighed on markets recently, pushing investors toward the
relative safety of government debt. The S&P 500 wavered in
early trading Thursday, one day after the broad market gauge fell
to its lowest level in more than two months.
Some analysts say the relationship between stocks and Treasury
yields may be losing strength in part due to the central bank's
intervention. The Fed has signaled it will do whatever is necessary
to help the U.S. economy recover from the pandemic.
"The central bank isn't going to let yields rise substantially,"
said Mr. Milstein.
Write to Sebastian Pellejero at sebastian.pellejero@wsj.com
(END) Dow Jones Newswires
September 24, 2020 11:44 ET (15:44 GMT)
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