BOND REPORT: 10-year Government Bond Yield Rebounds Off Lowest Level Since 2017
March 26 2019 - 8:26AM
Dow Jones News
By Mark DeCambre, MarketWatch
Longer-dated bond yields set to snap 4-session negative
streak
U.S. Treasurys on Tuesday faced modest selling, pushing yields
higher, as worries about world-wide economic contraction, which had
sparked buying in government debt last week, appeared to be on
pause.
The yield on the 10-year Treasury note rose 2.4 basis points to
2.442%, a day after hitting its lowest level since Dec. 29, 2017.
The yield on the 2-year note climbed 3.7 basis points to 2.291%,
while the 30-year Treasury bond yield picked up 2.4 basis points at
2.892%. Yields and bond prices move in opposite directions.
Long-dated yields were on pace to snap a four-session negative
streak.
A modest rise in yields for government bonds on Tuesday come as
U.S. stocks looked set to stage a rebound
(http://www.marketwatch.com/story/dow-futures-climb-as-china-trade-talks-set-to-resume-2019-03-26)
after a pair of shaky days for assets perceived as risky. Futures
for the Dow Jones Industrial Average and the S&P 500 index were
up by at least 0.5%.
"The rebound in US Treasury yields boosted global equities with
most Asian indices closing in the green and US e-mini futures were
also pointing to a positive start to Tuesday's trading session,"
wrote market analysts at XM
(https://www.xm.com/european-open-preview-sterling-steady-as-may-loses-control-of-brexit-process-dollar-weighed-by-falling-us-yields-98492),
in a daily research note on Tuesday.
Markets broadly have been unsettled after a rally took the yield
on the 10-year note below the yield on the 3-month Treasury for the
first time since 2007. The yield-curve inversion
(http://www.marketwatch.com/story/10-year-german-bond-yield-flirts-with-zero-after-lackluster-eurozone-pmis-2019-03-22)
that resulted is seen as a reliable warning of a potential
recession within a year or two, and was credited with sparking a
selloff in equity benchmarks.
The 3-month yield edged up to 2.454% early Tuesday.
Read:The yield curve inverted--here are 5 things investors need
to know
(http://www.marketwatch.com/story/the-yield-curve-inverted-here-are-5-things-investors-need-to-know-2019-03-22)
Declines in yields follow a Federal Reserve that signaled at its
March 18-19 that it wasn't likely to raise rates in 2019,
downshifting projections for rate increases to zero from two
indicated in its December forecast. On top of that market
participants say that the management of the central bank's balance
sheet, may curtail debt supplies. Both futures that support higher
buying in debt, driving yields lower.
"The shift in expectations comes after the Fed last week ruled
out further rate increases in 2019, reinforcing its dovish stance,"
wrote analysts at XM in a Tuesday research note.
Also in focus on Tuesday, U.K. markets wrested control of the
Brexit process from Prime Minister Theresa May in a late-Monday
vote. Now, Parliament is bracing for a fresh round of votes to help
resolve Britain's exit from the European Union, which had
originally been set for a March 29 deadline.
U.K. 10-year Treasury notes , also known as gilts, were at
1.011%, little changed from Monday's levels.
Looking ahead, investors are awaiting a sale of about $40
billion in 2-year Treasury notes, which could influence yields.
On the data front, reports on housing starts and building
permits for February are expected at 8:30 a.m. Eastern Time, while
the Case-Shiller home price index for January is due at 9 a.m.,
followed by a reading on consumer confidence at 10 a.m.
(END) Dow Jones Newswires
March 26, 2019 08:11 ET (12:11 GMT)
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