U.S. Government Bonds Extend Rally
07 December 2018 - 3:10AM
Dow Jones News
By Sam Goldfarb
The nearly monthlong rally in U.S. government bonds showed no
signs of slowing Thursday as investors found new reasons to pile
into safer assets.
In recent trading, the yield on the benchmark 10-year U.S.
Treasury note was 2.854%, according to Tradeweb, compared with
2.921% Tuesday. Yields fall when bond prices rise.
U.S. markets were closed Wednesday in observance of the day of
mourning for former President George H.W. Bush.
Yields declined anew in the overnight session as traders reacted
to the arrest by Canadian authorities of Huawei Technologies Co.'s
chief financial officer at the request of the U.S. -- an unexpected
development that some analysts said could further weigh on
U.S-China trade talks.
Crude oil prices -- the recent decline of which has helped drag
down yields by depressing inflation expectations -- were also lower
Thursday, as the Organization of the Petroleum Exporting Countries
and its partner producers gathered in Vienna to debate an output
deal.
"Right now people need to take off some risk and they're buying
Treasurys," said Brian Edmonds, head of interest rates at Cantor
Fitzgerald LP. "It's tough to get out in front of that because it
seems it's got more room to go."
Thursday's rally in Treasurys was different in one respect from
recent trading sessions, in that short-term Treasury yields were
falling more than longer-term yields.
In recent trading, the gap between the two-year and 10-year
Treasury yields, known on Wall Street as the 2-10 spread, was 0.139
percentage point, according to Tradeweb, up from 0.110 percentage
point on Tuesday.
The rapidly shrinking spread has concerned investors because
economic recessions have often followed occasions when the two-year
yield has exceeded the 10-year yield -- a phenomenon known as an
inverted yield curve.
Write to Sam Goldfarb at sam.goldfarb@wsj.com
(END) Dow Jones Newswires
December 06, 2018 10:55 ET (15:55 GMT)
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