BOND REPORT: Treasurys Little-changed As Investors Await French Election

Date : 21/04/2017 @ 23:28
Source : Dow Jones News

BOND REPORT: Treasurys Little-changed As Investors Await French Election

By Sunny Oh

Fed speakers, U.S. economic data are on the docket for Friday

Treasurys showed little change on Friday as voters prepared to cast ballots this weekend in the first round of the French presidential election.

Investors are also looking ahead to a spate of U.S. economic data, and speeches from Minneapolis Fed President Neel Kashkari and Fed Vice Chair Stanley Fischer.

The yield for the 10-year Treasury note gained 0.3 basis point to 2.235%. The yield for the 2-year note edged off 0.4 basis points to 1.184%, while the 30-year bond rose 0.3 basis point to 2.887%.

Bond prices move in the opposite direction of yields; one basis point is one hundredth of a percentage point.

The election in France has transformed into what pundits are calling a tight four-way race, though polls still suggest that centrist candidate Emmanuel Macron will face off with one of his euroskeptic rivals in the second round. It's expected that no candidate will receive 50% of the vote this weekend, the threshold for winning the race outright. The results will be known by 9 a.m. Eastern on Sunday.

Both far-left Jean-Luc Melenchon and far-right Marine Le Pen have taken a critical position on the Eurozone, the former arguing the economic bloc acts as a conduit for pushing neo-liberal capitalism to its member countries and the latter promising to declare a referendum for France to re-negotiate its membership of the EU.

"Looking at market levels in Europe, there is a big assumption that Macron makes it into the 2nd round notwithstanding the tight polls," said Peter Boockvar, chief market analyst for the Lindsey Group, in a note. "So, stating the obvious, if Macron is in the top two, stocks rally, euro rises and bond yields jump. We'll also see a stock rally elsewhere and bonds will selloff with yields higher."

Yield spreads between 10-year German government bonds and French government bonds narrowed to 0.694 basis points, the tightest in two weeks.

Traders are also looking ahead to morning data releases of Markit's purchasing managers index in the manufacturing and services sector at 9:45 a.m. Eastern, and existing home sales at 10:00 a.m. The indicators will give a broad overview the economy's current health.

Minneapolis Fed President Neel Kashkari, a voting member of the U.S. central bank's monetary policy setting committee will moderate a discussion at Hamline University in St. Paul, Minneapolis at 9:30 a.m. Fed vice chair Stanley Fischer will give an interview on CNBC between 11:00 and 11:30 a.m.

 

(END) Dow Jones Newswires

April 21, 2017 09:13 ET (13:13 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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