BOND REPORT: Treasury Yields Rise As Syria Jitters Fade
16 April 2018 - 10:37PM
Dow Jones News
By Sunny Oh
Retail sales are expected to rise 0.4% in March
Treasury prices fell on Monday, pushing up yields and giving the
week's start a bearish tone as fears over an escalation of
hostilities in Syria faded, pushing investors out of U.S.
government paper.
What are Treasurys doing?
The 10-year Treasury note yield climbed 3.2 basis points to
2.860%, the 2-year note yield rose 1.7 basis point to 2.386%. The
30-year bond yield added 2.8 basis points to 3.064%.
Bond prices move in the opposite direction of yields.
What's driving Treasurys?
With fears fading over U.S. military intervention in Syria,
investors who had sought shelter in Treasurys switched back into
risky assets, with stocks set to open higher
(http://www.marketwatch.com/story/dow-futures-rise-150-points-as-syria-fears-fade-with-bank-of-america-due-to-report-2018-04-16).
The U.S., Britain and France launched missile strikes in Syria
against chemical weapons sites while leaving President Bashar
al-Assad's conventional military facilities intact. That helped
ease concerns the U.S. would escalate tensions with Russia, which
has backed the incumbent Syrian regime.
See: Syria brushes off U.S.-led airstrikes, launches new attacks
against rebels
(http://www.marketwatch.com/story/syria-brushes-off-us-led-airstrikes-launches-new-attacks-against-rebels-2018-04-15)
That also put economic data back on the radar of investors who
are contending with the potential for inflation to hit the Federal
Reserve's 2% target range, raising the risk of the central bank to
lean toward a more aggressive hiking trajectory. A strong retail
sales figure on early Monday could give a better picture of
building inflationary pressures.
Read: Fed's Kashkari says fiscal stimulus supports moving ahead
with interest-rate tightening
(http://www.marketwatch.com/story/feds-kashkari-says-fiscal-stimulus-supports-moving-ahead-with-interest-rate-tightening-2018-04-16)
What did market participants say?
"The Syrian action was by far the most relevant event
influencing the overnight price action and we're admittedly
somewhat surprised to see it triggered a 'risk on' move. While
there hasn't been much in terms of a Russian response, we're
skeptical that the net takeaway should be to conclude geopolitical
risks are lower as a result. Nonetheless, equity futures are higher
overnight and Treasurys are under pressure," said Ian Lyngen and
Aaron Kohli, fixed-income strategists at BMO Capital Markets, in a
note.
What economic data is set to come?
Retail sales are set to come in at 8:30 a.m. Eastern. Economists
polled by MarketWatch forecast a gain of 0.4% in March, from the
0.1% drop in the previous month. The Empire State Index, a survey
of manufacturing conditions in New York state, will arrive at 10
a.m., at the same time as business inventories for February.
Atlanta Fed President Raphael Bostic will give a talk at 12:15
p.m. on the economy and rural market trends.
See:Economic Calendar
(http://www.marketwatch.com/Economy-Politics/Calendars/Economic)
(END) Dow Jones Newswires
April 16, 2018 08:22 ET (12:22 GMT)
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