U.S. Treasury Yields Fell Sharply -- Update
By Sam Goldfarb
U.S. Treasury yields registered their biggest one-day decline
since early November on Thursday, reflecting renewed demand for
government debt after sustained selling in the first quarter.
The yield on the benchmark 10-year U.S. Treasury note settled at
1.531%, according to Tradeweb, compared with 1.637% on
Yields, which fall when bond prices rise, edged lower overnight
before dropping sharply near the start of U.S. trading, and
continued their slide throughout much of the session. 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
on net last week, the most since November.
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.
Thursday's move marked the biggest decline in the 10-year
Treasury yield since Nov. 4, the day after the U.S. election when
it seemed unlikely that Democrats would gain control of the Senate
as many investors had been expecting. Yields quickly rebounded that
month when Pfizer Inc. reported encouraging coronavirus vaccine
results. They then got another boost in January when Democrats
ultimately did take the Senate by winning two runoff elections,
thus improving the chances of large-scale stimulus spending.
Treasury yields still remain much higher than where they started
The 10-year finished last year at 0.913%. The yield on the
30-year bond settled Thursday at 2.210%, 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 16:30 ET (20:30 GMT)
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