U.S. Treasury Yields Fall Sharply
By Sam Goldfarb
U.S. Treasury yields were on track to register their biggest
decline in months Thursday, reflecting renewed demand for
government debt after sustained selling in the first quarter.
In recent trading, the yield on the benchmark 10-year U.S.
Treasury note was 1.548%, according to Tradeweb, compared with
1.637% on Wednesday.
Yields, which fall when bond prices rise, edged lower overnight
before dropping sharply near the start of U.S. trading. That came
despite a strong retail sales report that might normally be
expected to push yields higher since they tend to rise when the
economic outlook improves.
Debt investors, though, have shrugged off good economic data in
recent days as much as they ignored some weak data over the winter.
Instead, higher yields have lured buyers, apparently aided by
technical factors such as renewed demand from Japanese
Banks and insurers in Japan had contributed to a wave of global
selling in February, according to investors and analysts, prompted
by efforts to finalize their investment returns for the financial
year that ended on March 31. Now, there is evidence that they are
buying again, with new government data showing that Japanese
investors bought the equivalent of $15.6 billion of overseas bonds
last week, according to BMO Capital Markets.
One factor supporting Treasurys right now is that "April was
always going to be a transition month," said Jim Vogel,
interest-rates strategist at FHN Financial.
Investors sold Treasurys earlier in the year because they were
optimistic for a Covid-19 vaccine and government spending-fueled
economic rebound that could generate higher inflation and,
eventually, interest-rate increases from the Federal Reserve. Now
they are more interested in seeing that forecast come to fruition,
but they need more than one month of data to know if it has, Mr.
Treasury yields, which play a critical role in the economy by
helping set interest rates for consumers and businesses, remain
much higher than where they started the year.
The 10-year finished last year at 0.913%. The yield on the
30-year bond was recently 2.216%, down from 2.325% Wednesday but up
from 1.642% at the end of last year.
Write to Sam Goldfarb at firstname.lastname@example.org
(END) Dow Jones Newswires
April 15, 2021 14:17 ET (18:17 GMT)
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