BOND REPORT: 10-year U.S. Government Bond Yield Dips Below 2%
June 20 2019 - 8:14AM
Dow Jones News
By Sunny Oh
U.S. Treasury yields fell on Thursday in the wake of Wednesday's
Federal Reserve meeting that indicated the possibility of easier
monetary policy later this year.
What are Treasurys doing?
The 10-year Treasury note yield was down 1.4 basis points to
2.013%, falling as low as 1.977% overnight, while the 2-year note
rate slipped 4.4 basis points to 1.722%. The 30-year bond yield
fell 0.9 basis point to 2.531%. Bond prices move in the opposite
direction of yields.
What's driving Treasurys?
Bond yields have made a remarkable journey from the start of the
year as expectations for the Federal Reserve to carry out rate more
interest rate hikes swiftly turned into hopes for cuts, sending the
benchmark 10-year yield to the lowest level since November
2016.
The U.S. central bank appeared to open the door to rate cuts
later this year after its policy statement removed the word
"patience." Analysts also keyed into the Fed's interest-rate
projections, or "dot plot", which showed seven members of the
Federal Open Market Committee forecast two rate decreases before
the end of the year.
The Fed has come under attack from the White House for not
loosening monetary policy this year. News reports say President
Donald Trump has looked into the legality of ousting Fed Chairman
Jerome Powell from his role as the head of the U.S. central
bank.
See: What the Fed's Latest Move Means for Investors
(http://www.marketwatch.com/articles/what-the-feds-latest-move-means-for-investors-51560969604)
Read: Fed holds interest rates steady -- but it leaves itself
plenty of wiggle room by removing 'patient' pledge
(http://www.marketwatch.com/story/fed-holds-interest-rates-steady-will-now-closely-monitor-data-in-shift-away-from-patient-stance-2019-06-19)
What did market participants' say?
"Chair Powell introduced an "easing policy bias" as he "will
closely monitor the implications of incoming data" -- preparing
markets for a possible twenty-five bps short-end interest rate cut
at the July Meeting and a follow-up of twenty-five bps rate cut at
the September Meeting," wrote John Herrmann, a rates-strategist at
MUFG Securities.
What else is on investors' radar?
In economic data, weekly jobless claims and the June's
Philadelphia Fed index is set for release at 8:30 a.m. Eastern.
The Bank of England voted to keep rates at 0.75%, but members of
its Monetary Policy Committee said the U.K. central bank should
eventually tighten policy in the coming years.
(END) Dow Jones Newswires
June 20, 2019 07:59 ET (11:59 GMT)
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